IRS Budget Ballooning: No End in Sight
TL/DR –
President Biden has proposed an additional $104 billion in funding for the Internal Revenue Service (IRS), on top of its $12.3 billion annual budget and the $80 billion already enacted in the Inflation Reduction Act. U.S. Sen. Mike Crapo of Idaho questions this substantial increase, pointing out that historically, the IRS’s annual appropriations have remained consistent when adjusted for inflation. Crapo criticizes the IRS for its inefficiencies and argues that the additional funds should be used to modernize the agency’s systems, reduce its annual funding needs, and improve taxpayer services, rather than for increased enforcement and “unnecessary side projects.”
President Biden’s FY 2025 IRS Budget Proposal: A Concern for Taxpayers
President Biden’s fiscal year 2025 budget proposal calls for an additional $104 billion in funding for the Internal Revenue Service (IRS) over its $12.3 billion annual budget and the $80 billion already allocated in the Inflation Reduction Act (IRA). IRS Commissioner Danny Werfel’s recent response to queries on curbing the IRS’s excessive budget growth revealed that such increases are being intended as the new norm, raising concerns.
The IRS’s Justification for Additional Funds
In a recent hearing on the IRS budget, Commissioner Werfel stated that the IRS would utilize the already authorized $80 billion funding to “rebuild” over a decade. Despite existing questions about the five-fold or more budget increase, the IRS maintains these funds are necessary to retain employees and upgrade its systems. In requesting an additional $104 billion, accounting for eight times the agency’s annual budget, the IRS once again cites employee retention and system updates as reasons. Such staggering budget growth prompts questions about the end of such taxpayer burden.
IRS Budget History: A Look at the Past Decades
Adjusting for inflation, IRS’s annual appropriations have remained largely consistent for the past two decades. In 2004, the agency’s budget was $10.4 billion; in 2014, $12 billion; and in 2022, $12.6 billion. This consistency took a turn with the $80 billion supplement from the IRA, raising concerns about the vague plan and missing line-item cost projections. The President’s budget adopts a “just spend more, no questions asked” approach, which fails to provide a viable solution.
IRS Efficiency and Modernization Concerns
Despite receiving stable funding for years to modernize its technological systems, the IRS has chronically underperformed. These improvements do not require $80 billion, let alone an additional $104 billion, but rather improved prioritization and execution. The President’s supersized budget request seems to be asking taxpayers to permanently fund an inefficient, bloated IRS.
Impact of New Funding on IRS Services
Although the $80 billion funding was touted as transformative, this windfall has barely improved service, with millions of taxpayer correspondences unanswered and hundreds of thousands of ID theft cases unresolved. The supplemental modernization funding is scheduled to run out years before the IRS completes planned projects.
The Need for Efficiency, Transparency, and Rigorous Planning
Instead of side projects and increased enforcement, the IRS should focus on becoming more efficient, rigorously planning, and providing full transparency to Congress and American taxpayers. This would prevent the misuse of taxpayer dollars on wasteful programs and overly aggressive enforcement, thus improving taxpayer services.
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