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Earlier this year, the Inflation Reduction Act provided $80 billion to the IRS to rebuild, focusing on improving customer service and reducing the tax gap.
Now as we enter fiscal year 2023, a new report from the Center on Budget and Policy Priorities (CBPP) outlines lawmakers’ critical next step: providing adequate funding to sustain the rebuild.
Met with what CBPP calls ‘bipartisan interest’, Treasury Secretary Janet Yellen outlined four key areas at the IRS:
-clearing the backlog of unprocessed tax returns
-improving taxpayer services
-overhauling the IRS’ outdated technology
-hiring new staff
When drafting the Inflation Reduction Act, the Senate Finance and House Ways and Means Committees underscored the need to ‘fill the gaps’ that a decade of insufficient funding caused the IRS. The Senate and House Appropriations committees will need to continue to provide adequate annual funding each year to ensure a successful rebuild.
The ultimate success of the rebuild largely depends on the funding levels Congress will set for this fiscal year and future years. During year-end deliberations, failing to provide an adequate annual base funding at the IRS would undermine the long-term certainty needed to rebuild the agency and jeopardize the entire effort.