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Debt Ceiling Deal Will Cut IRS Funding

A bipartisan deal to raise the debt ceiling and impose spending caps has been made by the United States government. Part of this deal involves reallocating approximately $20 billion of the $80 billion of funding that the IRS was set to receive under the Inflation Reduction Act.


President Biden and other Democrat congress members wanted the IRS to receive this funding so that the agency is better equipped to fight against tax fraud, and tax evasion, improve taxpayer assistance, and clear the massive backlog of returns stemming all the way from the beginning of the pandemic. On the other hand, many Republican members of Congress disagreed with the IRS funding, as they believe the funding will increase auditing towards the middle-class taxpayer.

Full Speed Ahead

Many Republican members of Congress are considering the reallocation of $20 billion a victory for them, as many Republicans are against giving the IRS more power. Another important to thing to note is that the large part of that money being taken away from the agency was supposed to be used for tax enforcement. Despite losing a large chunk of funding, the IRS along with the White House both emphasized that the agency will continue to move forward in restructuring, and make good on other initiatives. One of these initiatives that the IRS guaranteed to make good on is its promise to crack down on tax cheats from wealthy taxpayers.

Wrap Up

Despite the agency saying it plans on moving full speed ahead with all of its initiatives given under the Inflation Reduction Act, it is certainly going to be harder to do so with $20 billion less. This particular part of the debt ceiling deal could really put a wrench in the foundation of the IRS’s restructuring plans. In the meantime, we will have to wait and see how the IRS will operate in the coming months.

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