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IRS faces $20 billion cut under debt ceiling deal

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Quotes from Mark W. Everson, Former IRS Commissioner; alliantgroup Vice Chairman

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Last year, Congress approved $80 billion in new funding for the Internal Revenue Service — but the bipartisan debt ceiling deal would claw some of that money back.

If the deal passes Congress, the IRS may see only about $60 billion of those funds over a 10-year period.

The money, which was originally included in the Inflation Reduction Act, is meant to support the agency in cracking down on tax cheats and providing better service to taxpayers. But Republicans have been critical of sending so much money to the IRS and skeptical that the investment won’t lead to increased audits of hardworking Americans.

Having a set allocation of money for the next decade, rather than waiting to see what Congress appropriates annually, is key in helping the IRS plan a massive overhaul to its operations, which desperately need modernizing.

But the White House has said the cut included in the debt ceiling deal won’t fundamentally change what the IRS can do over the next few years.

So far, the agency has hired 5,000 new customer service agents with the new money, helping to significantly increase the amount of taxpayer calls it could answer during the 2023 tax filing season. The IRS also plans to launch a free filing tax pilot program next year.

“There’s plenty for the IRS to do. But $60 billion is plenty of money,” said Mark Everson, a former IRS commissioner and current vice chairman at the tax consulting firm alliantgroup. “I still think they’ll be able to significantly augment their enforcement activity.”

Biden administration officials have repeatedly said taxpayers earning less than $400,000 a year won’t face an increase in taxes due to the new funding, though there is some uncertainty about how exactly the IRS can ensure this.

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Mark W. Everson

The Honorable Mark W. Everson was the nation’s 46th Commissioner of Internal Revenue Service serving from 2003 until 2007. Prior to joining the IRS, Everson held Bush administration posts as Deputy Director for Management at the Office of Management and Budget and Controller of the Office of Federal Financial Management. Everson also served in the Reagan administration, holding several positions at the United States Information Agency and the Department of Justice, where his assignments included Deputy Commissioner of the Immigration and Naturalization Service. At the state level, Everson oversaw the Indiana Workforce and Unemployment Insurance Systems under Governor Mitch Daniels.

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