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After Trump's Win, Accounting Professionals Are in a 'Wait-and-See' Mode on IRS' Future

By:
Karen Sibayan
Published Date:
Nov 18, 2024

IRS funding has long been a point of contention for the Republican party, proven by the clawback of $20 billion from the $80 billion provided to it by the Inflation Reduction Act of 2022. And so, under the incoming Trump administration, IRS funding is at significant risk. In particular, tax practitioners are wondering whether any portion of the funding will remain available for taxpayer service-related improvements at the IRS.

The IRS's new series of changes covers many relief measures. These include disaster assistance after the devastating impact of Hurricane Milton and stopping the automatic levying of penalties for late reports of foreign gifts and inheritance. However, given the Republican victory in the Nov. 5 presidential elections,  there is a lot of uncertainty regarding the IRS's future, Accounting Today reported.

During his campaign, President-elect Donald Trump repeatedly promised to establish tax breaks for caregivers, domestic car purchases and U.S. citizens overseas. He also floated the idea of exempting police officers, firefighters, and both current and retired military members from paying taxes, Accounting Today said. Additionally, both presidential candidates said that they would make tips for services tax-free.

After Trump's victory,  Accounting Today said that several accounting professionals are currently in a "wait and see" mode to find out if these promises will come to fruition. "The Republicans' control of the Senate makes it much more likely that Republicans will be able to implement many of Trump's proposed tax policies, such as making parts of the expiring 2017 [Tax Cuts and Jobs Act] provisions permanent," noted John Gimigliano, principal in charge at KPMG, in a statement.

According to Accounting Today, IRS funding has long been a point of contention for the Republican party, proven by the claw back from the Inflation Reduction Act of 2022 (IRA). A separate Accounting Today article stated that in the two years since the IRA was enacted, the claw back has already amounted to roughly $20 billion. 

"IRS funding is at significant risk right now," including "the annual appropriation funding as well as the remaining IRA funding," said Rochelle Hodes, a principal at Crowe LLP. She added that her only question on funding is, "Will any portion of the funding remain available for taxpayer service-related improvements at the IRS?" Hodes said.

She highlighted that the Tax Cuts and Jobs Act of 2017 is the first significant priority for the new Trump administration, followed closely by determining "how will the cost of that endeavor be determined."

"If the view that is held by several Senate Republicans wins the day, then the cost of extending the expiring provisions will not be counted under those particular budget rules that are created dealing with extending current policy," Hodes noted. "If, however, that view is not adopted, then there is a high cost just to TCJA, and so any other provisions with cost will sort of stretch the boundaries of what many in Congress would be comfortable with." 

In another article, Accounting Today reported that Republicans have mostly asked for cuts in the agency's enforcement budget thus far. The enforcement increase is supposed to be allotted to pay for the cost of the IRA, although the funding increase is also supposed to be for enhancements to taxpayer service and technology.

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