According to the Federal News Network, The IRS is facing substantial cuts to funds meant to rebuild its workforce and modernize its legacy IT systems over the next decade, as part of a deal to raise the debt ceiling and avoid a first-ever government default.
The White House and congressional Republicans reached a final agreement Sunday night to limit federal spending over the next two fiscal years, in exchange for raising the debt limit through January 2025.
Congress still needs to pass the spending plan by June 5 to avoid a federal default. That’s about how long the Treasury Department estimates it still has enough revenue on hand to make scheduled payments, without having to borrow additional funds.
The spending deal struck by the Biden administration and House Speaker Kevin McCarthy (R-Calif.) would keep non-defense discretionary spending roughly flat in fiscal 2024, and would cap growth in non-defense spending to 1% in FY 2025.
The IRS is warning House lawmakers that plans to eliminate nearly $80 billion in agency modernization funds would stall ongoing plans to improve taxpayer services.
The IRS, using about 1% of the nearly $80 billion received in the Inflation Reduction Act, went from answering 15% of calls in 2022 to answering 87% of calls this year.
But the House last week passed a bill that would raise the debt ceiling in exchange for rolling back all unspent funds the IRS received in the IRA to rebuild its workforce and upgrade its legacy IT systems.
The White House says the Limit, Save, Grow Act would result in a 22% cut to nondefense discretionary spending, and would result in the reduction of tens of thousands of federal positions.
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IRS Commissioner Danny Werfel told the House Ways and Means Committee last week that zeroing out the agency’s IRA funds would cut short plans to rebuild its workforce and modernize its legacy IT.
“If you repeal the Inflation Reduction Act, you eviscerate our ability to fix the problems that we’ve had historically,” Werfel said last Thursday.