The final language in the budget deal pushing President Joe Biden and House Speaker Kevin McCarthy to a big vote this week will still bring on board thousands of new enforcers tasked with pushing up revenue collection rates with a focus on the rich.
And White House officials are keeping alive the possibility of coming back for more funding, even after negotiators agreed to two annual $10 billion cuts in IRS funding.
That means the deal leaves about $60 billion of the money on the table to hire thousands of new agents and bolster enforcement — funding Republicans have voted completely against nix. That’s nowhere near enough for conservative “Freedom Caucus” members, one of whom on Tuesday compared the agency to the infamous Stasi.
The enforcement boost remains a “major priority” for the president and was a major revenue boost from his Inflation Adjustment Act that House Republicans hoped but failed to eliminate.
There is also an immediate $1.4 billion rebate on “uncommitted balances” in agency funding.
The IRS will continue to be able to spend that remaining $60 [billion]and spend that over the next few years,” a White House official told reporters after the deal was announced Saturday.
President Joe Biden’s negotiators agreed to take money back from an $80 billion increase in IRS funding from his Inflation Adjustment Act. His deal with Speaker Kevin McCarthy would save $1.4 billion, then agree to cut funding by $10 billion in each of the next two fiscal years
The deal is facing backlash from members of the House Freedom Caucus and other conservatives, after the House voted in January and again in April to completely repeal the $80 billion figure. Congressional Democrats included the funds in the Inflation Adjustment Act to strengthen enforcement and implement technology upgrades.
At a news conference Tuesday, Rep. Andy Biggs (R-Ariz.) that the cuts were insufficient, calling the IRS “the new Stasi, the IRS agents, to be used as an armed IRS force,” comparing it to the notorious East German secret police.
Rep. Andrew Clyde (R-Ga.) said the issue was “personal to me, because I was a victim of the armed IRS in 2013.”
Despite claims that this disastrous deal took away funding for Joe Biden’s audit army of IRS agents, the billing tax doesn’t lie. In reality, the deal will yield less than $1.4 billion. As a reminder, we promised the American people, the very first bill this Republican Congress passed, that we would revoke the $80 billion that Democrats appropriated last year for the already bloated IRS.”
“We promised US taxpayers they would protect them and conducted targeted audits. So we quickly promised the nation that this would be a top priority under a Republican majority in the House. This deal breaks those promises,” he said.
(IRS agents seized more than $900,000 from Clyde, a gun store owner, after he made a series of deposits just under the reportable $10,000 amount. The agency later returned the money and apologized).
Republican Representative Nancy Mace (RS.C.) mentioned the IRS provisions on Twitter: “A $1.4 billion cut to the IRS does not equate to $80 billion in cuts to the IRS. It also doesn’t mean we’re “hollowing out” the IRS or its 87,000 new hires, joining a group of Republicans complaining about the deal.
She added: “$10 billion is reportedly being cut off for 2024 during the [appropriations] process. But it’s not in the bill. That money can be cut anywhere the IRS decides.”
That assessment is supported in part by the White House. While the deal cuts funding from the $80 billion provided over a decade under current legislation, it won’t affect the remaining $60 billion. And the cuts happen over the longer range. The $0 billion cuts are to be applied in fiscal years 2024 and 2025. The White House has agreed to implement the additional cuts through the regular credit process.
House Speaker Kevin McCarthy faces criticism from House conservatives who say the IRS’s cuts aren’t enough. The House GOP budget plan would have withdrawn the entire $80 billion
Republicans have resisted aggressive IRS enforcement and have targeted the armed Criminal Division
“We don’t believe anything will need to change anytime soon,” said a White House official, calling it “a major priority” for the president. “We believe the IRS will continue to be able to implement its plans in the short term, and then it may be necessary to come back to Congress and ask for additional funding.”
According to a Government Accountability Office, between 2010 and 2021, “the majority of additional taxes recommended by the IRS from audits came from taxpayers with incomes less than $200,000” report from 2022. “However, the additional taxes recommended per audit increased as taxpayer income increased,” the GAO found.
House Ways and Means Committee Republicans say a ‘supercharged’ IRS will focus on lower- and middle-income Americans, with most of the funds coming from those earning less than $200,000 a year.
The IRS is a perpetual target for Republicans, and Representative Matt Gaetz (R-Fla.) has introduced legislation to prevent the agency from purchasing guns and ammunition used by the Criminal Division.
The figure of 87,000 comes from a 2021 Treasury report that says the agency could hire 86,852 full-time employees over a ten-year period with $80 billion in cash.
The agency announced plans to hire 20,000 new employees in April.
The Biden White House has regularly defended the provision — praising a 2022 Congressional Budget Office score that said it would raise $124 billion that, according to the law, “will generate from the collection of taxes already owed by wealthy people and big companies’.
There is no CBO yet on the new deal and how it might affect the revenue the new agents would bring in through more audits and enforcement.
The White House does not rule out trying to raise money later.
“It could be that, you know, six, seven, eight years from now it would be necessary to come back and ask for more IRS funding, just like there would be a need to do that after the 10-year window anyway.” So we don’t think it will fundamentally change what the IRS does over the next few years,” the White House official said.