Debt limit bill cuts IRS for Republicans, but Democrats say they expect little impact in the near term

WASHINGTON (AP) — House Republicans are seeking to fulfill their campaign promise to rein in the IRS by lowering the debt ceiling and cutting the budget package pass through Congress.

The bill eliminates $1.4 billion in federal tax dollars from the Democrats’ health and energy package, which was passed in a party-line vote last year. The White House says the debt deal also includes a separate agreement to take $20 billion from the IRS over the next two years.

Democrats spent a lot of political capital getting the IRS more money last year. They faced a flood of campaigns, many of them misleading, about the expected hiring of 87,000 “new agents.” target lower and middle class Americans.

Now, Biden administration officials are saying that spending cuts secured by Republican negotiators will have minimal impact on the agency over the next few years.

The agency will still receive nearly three-quarters of the $80 billion increase Congress approved last year. And the agency has the flexibility to spend some of that money earlier than planned, officials stressed.

“The IRS has the resources it needs in the near future to improve customer service and go after wealthy and corporate tax evaders,” Treasury Undersecretary Wally Adeyemo tweeted.

But for Republicans looking to pass the bill, cutting IRS costs is a major selling point. First account House Republicans this year would have rolled back most of the extra dollars Congress approved for the IRS a year ago. The bill got nowhere in the Democratic-controlled Senate.

As for the debt deal, “it puts the IRS ahead,” said Rep. Patrick McHenry, RN.C., one of the GOP’s chief negotiators.

“We have 1.4 billion in this account. $100,000 down payment to cancel their hiring this fiscal year,” McHenry said. “We will come back for more in the appropriations process.

In April, IRS executives released the details on how the agency will use an $80 billion infusion to improve operations, pledge to invest in new technology, hire more customer service representatives and expand its ability to audit wealthy taxpayers. The plan outlines how the IRS will allocate $80 billion through fiscal year 2031.

Now that some of that money has been recouped, the question is what programs might be on the back burner. Treasury officials say they plan to create a free online tax filing system that is currently in the pilot phase of developmentFor example, cuts will not be affected.

But some analysts are skeptical of the Biden administration’s assurances. Steve Rosenthal, senior fellow at the Urban-Brookings Tax Policy Center, said “the loss of funds for the agency has to be a setback.”

“With less money and less resources, things will slow down. He said some of the promised programs could take longer to develop. “I don’t know if it’s going to come from service, enforcement, technology or otherwise.”

Rep. Richard Neal of Massachusetts, the top Democrat on the House Ways and Means Committee, said he spoke with Treasury about the impact of the debt limit bill’s IRS funding cuts: “I left happy, if not happy.”

He said the potential default was a much bigger concern, and he understood why the White House agreed to the cuts.

“The fact that the money will go to other initiatives is not my first choice, but I think to get it over the goal line, given the contrast of the international disaster, it has to be done,” he said. .

Neal said he didn’t think the IRS would be badly hurt by the cut, adding, “That reassured me.”

The Congressional Budget Office projected that the $1.4 billion decade and with a decrease in income,” he says May 30 to Speaker Kevin McCarthy, California.

CBO’s projections do not include the $20 billion the White House has agreed to spend on other programs.

Brendan Boyle, the top Democrat on the House Budget Committee, said former President Donald Trump’s own IRS commissioner has repeatedly pointed out to Congress the agency’s severe understaffing. Number of IRS enforcement employees since 2010 dropped by about a third, which Boyle said resulted in lower-income and minority taxpayers being audited at a higher percentage than the wealthy.

“I’m very concerned that some of these cuts could affect the direction of the IRS, which means more integrity when it comes to audits,” Boyle said. “It’s definitely an area I’m going to keep an eye on over the coming weeks and months.”

Debating the IRS cuts just before a House vote Wednesday night, Rep. Rep. Garret Graves, R-La., praised the Republican effort.

“I’ve never had a voter say, ‘Gosh, I wish I could do more audits,'” Graves said.

Godfrey Kemp

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