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Latest Spending Bill Reduces IRS Budget Increase from 14 to 6 Percent

Ruth Singleton
Published Date:
Mar 10, 2022


The House of Representatives passed an omnibus spending bill on Wednesday that reduces an IRS budget increase from 14 to 6 percent, Accounting Today reported. Much of that increased funding will be directed at improving taxpayer service. The bill allocates up to $75 million to address the IRS’s backlog, including its paper inventory of amended returns, correspondence and adjustments to return filings.

The original 14 percent increase, approved in a previous version, would have covered tax enforcement, technology upgrades, hiring and other expenses, according to Tax Notes, Also omitted from the spending bill are items that the House approved last summer, including some tax-related provisions for encouraging more retirement savings and a rollback of requirements for amortizing research-and-development costs under the 2017 Tax Cuts and Jobs Act.

According to Accounting Today, The House’s goal in approving the $1.5 trillion omnibus spending bill was to speed $14 billion in military, humanitarian and economic aid to Ukraine, which is under attack by Russia. Congress has been passing a number of short-term spending extensions since last year, but it kept IRS spending at the same levels. 

Under the omnibus bill, taxpayer service would get an additional $225 million budget increase (or 9 percent), including $21 million for investigative technology at the IRS’s Criminal Investigation division. Enforcement would also receive an extra $225 million, but that would translate to a 4 percent increase, according to Tax Notes. The Treasury Inspector General for Taxpayer Administration (TIGTA) would receive a 2 percent budget increase to $174 million, but that would represent a lower increase than the 3 percent it was set to receive under the bill approved by the House last summer.

“Overall, the omnibus would provide $12.6 billion to the IRS — up from fiscal 2021’s $11.9 billion but far short of the $13.6 billion” in the original House bill, Tax Notes reported. 

House Ways and Means Committee Chair Richard E. Neal (D-Mass.) released a statement, saying, “In this pivotal moment, the Congress has risen to meet some of the most pressing challenges at home and abroad. This legislation will create good-paying jobs, lower costs for families, and support those in need. Republicans starved the Internal Revenue Service of funding for far too long, and the taxpayer has paid the price. But in this bill, Democrats deliver the largest funding increase to the agency in decades. These resources will allow the agency to hire additional staff, enhance taxpayer service, and work toward the fullest and fairest tax administration possible. Importantly, we also send urgently needed aid to the Ukrainian people who continue to endure Russia’s unprovoked invasion. While we couldn’t secure all of our priorities, I am proud of these key investments. This is the latest major deliverable in our ongoing work for the people.” 

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