IRS chief calls for 2024 budget hike as Republicans slam $80 billion spending plan

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WASHINGTON, April 19 (Reuters) – Internal Revenue Service Commissioner Danny Werfel on Wednesday urged Congress to approve a $1.8 billion annual budget increase as Republicans criticized government spending plans. agency for $80 billion in new long-term funding as too burdensome for enforcement.

Werfel told a Senate Finance Committee hearing that the Biden administration’s $14.1 billion IRS budget request for fiscal year 2024 would allow for further improvements in taxpayer services after the agency improved its call center response times with 5,000 new employees funded by last year’s Cut Inflation Act.

The $80 billion that the decade-long legislation provides for investments to strengthen compliance and enforcement and modernize outdated IT systems comes on top of the annual operating budget, which is significantly lower in real terms from of 2010.

“That’s not enough resources to fund a tax system in an economy that grows in size and complexity every year,” Werfel said of the IRS’ 2023 tax budget of $12.3 billion.

The IRS released a spending plan earlier this month that calls for a total new hire of nearly 20,000 new employees in fiscal years 2023 and 2024, including 7,239 enforcement associates and 6,489 customer service associates. .

The strategic operating plan calls for spending nearly 60% of the Cut Inflation Act funds, or $79 billion for broader enforcement, but only $4.3 billion for taxpayer services. It also includes $3.9 billion for the administration of clean energy tax credits.

BUDGET OBJECTIVE

The higher weight of enforcement funds has drawn criticism from Republicans, who have repeated concerns about increased scrutiny of small business owners, despite Werfel’s promises not to raise audit rates on those earning less. of $400,000.

Sen. John Thune, a Republican from South Dakota, said he was “deeply concerned” that the “funds committed to promote the administration’s radical energy agenda” were of a similar size to the government’s spending plan. taxpayer services.

Some Republicans in the House of Representatives have targeted the repeal of $80 billion in IRS funding as a key demand for spending cuts to raise the federal debt ceiling by $31.4 trillion this year.

While Democratic Party control of the Senate may effectively block that option, tax policy experts say cutting annual appropriations for the IRS is an easier target as Congress debates spending plans for the fiscal year. 2024, which begins on October 1.

Reporting by David Lawder; edited by Diane Craft

Our standards: The Thomson Reuters Trust Principles.

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