Congress Proposes $12.3 Billion in IRS Funding for Fiscal 2024

The US House and Senate proposed holding IRS funding steady at $12.3 billion Thursday as part of a $1.2 trillion fiscal 2024 appropriations package that lawmakers hope to pass before a Saturday shutdown deadline.

The legislation claws back $20.2 billion in modernization funding for the tax-collection agency that Democrats had included in the 2022 tax-and-climate bill. House Speaker Mike Johnson (R-La.) said early Thursday that his chamber would take up the bill Friday.

The proposal is more than the $11.2 billion previously proposed by House Republicans and in line with the $12.3 billion previously proposed in the Senate.

The funding level is less than the $14.1 billion that the Biden administration sought in fiscal 2024, but more closely aligns with the administration’s proposal for fiscal 2025. That fiscal 2025 request was designed to ensure the total annual appropriations funding came in line with levels agreed to in a debt-limit law last year.

Democrats and IRS officials had pushed for a boost in the IRS’s annual budget, arguing billions in modernization funding provided in the 2022 tax-and-climate law are supplemental and shouldn’t be used to pay for day-to-day functions. But Republicans have sought in multiple ways to claw back the tax-and-climate spending.

Last year’s debt limit deal included an agreement between the White House and House Republicans to claw back about a quarter of the $80 billion set aside for the beleaguered agency in the tax-and-climate law. The agency’s plan for the money includes modernizing its technology and boosting its enforcement on wealthy Americans and businesses seeking to avoid paying tax.

Initially, the debt limit deal called for most of the clawbacks to be included in two $10 billion tranches in fiscal 2024 and 2025 spending bills. But lawmakers ultimately agreed to pull back all $20 billion in fiscal 2024 funding bill.

It repurposes $10.2 billion of the money for use in the Financial Services and General Government bill, which funds the IRS, and an additional $10 billion from the bill that funds agencies like the departments of Labor, Health and Human Services and Education. The funding was pulled from the tax-and-climate law’s funding for IRS enforcement, which originally stood at $45.6 billion.