IRS Funding Addressed in Fiscal Responsibility Act

President Biden has signed into law the new debt ceiling agreement that he reached with U.S. House of Representatives Speaker Kevin McCarthy (R-CA). The Fiscal Responsibility Act (FRA) suspends — as opposed to raising — the

debt ceiling until 2025, after the next presidential election.

IRS Funding is one of the many notable provisions that are addressed in the Fiscal Responsibility Act.

The Inflation Reduction Act (IRA), which was enacted in 2022, included an additional $80 billion in funding for the tax agency, with much of it designated for heightened enforcement activity against wealthy taxpayers. The FRA immediately rescinds $1.39 billion and pares back the funding by about $10 billion each year for 2024 and 2025. However, White House officials have indicated that they expect the funding cuts to make little difference in the IRS’s pending expansion plans because the agency planned to spend the original funding over several years. It may be able to spend some of the funds earmarked for later years earlier and then return to Congress to request more funding in the future.

Over the next several days, we will address the other notable provisions.

Please feel free to reach out to your ELO Tax Advisor for more information or clarity on these changes.