House Republicans vote to strip IRS funding, following pledge to repeal nearly $80 billion approved by Congress

Wealth

New U.S. Speaker of the House Kevin McCarthy, R-Calif., speaks with reporters in Washington, Jan. 7, 2023.
Jon Cherry | Reuters

House Republicans on Monday night voted to slash funding for the IRS, following a pledge from newly-elected Speaker Kevin McCarthy to repeal the money approved by Congress last year.   

Passing along party lines, the bill would rescind tens of billions allocated to the agency over the next decade through the Inflation Reduction Act passed in August.

The measure doesn’t have the support to pass in the Democratic-controlled Senate, and the White House opposed the bill in a statement released Monday.

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“It’s not going to become law, but it makes a very strong political statement,” said Mark Everson, a former IRS commissioner and current vice chairman at Alliantgroup, noting that the partisan IRS divide isn’t good for the agency’s “long-term stability.”

The bill comes less than two weeks after Democratic members of the House Ways and Means Committee released six years of former President Donald Trump‘s tax returns, angering many Republican lawmakers.

Known as the Family and Small Business Taxpayer Protection Act, the new House Republican measure would increase the budget deficit by more than $114 billion through 2032, according to the Congressional Budget Office.

IRS funding has face ongoing scrutiny

Treasury Secretary Janet Yellen in August outlined priorities for the new IRS funding — including plans to clear the backlog of unprocessed tax returns, improve customer service, overhaul technology and hire more workers.

However, the House Republican bill underscores the party’s continued pushback against President Joe Biden‘s agenda, including more funding for the IRS. The agency is expected to deliver the funding plan in February per Yellen’s request.

The agency is also preparing for a new commissioner, expected to be Danny Werfel, who served President Barack Obama and President George W. Bush as the IRS acting commissioner and Office of Management and Budget controller. 

Winning the nomination to serve as House Ways and Means Committee chairman on Monday, Rep. Jason Smith, R-Mo., said in a statement that the new IRS commissioner should “plan to spend a lot of time” before the committee answering questions.

While the success or challenges of the upcoming tax-filing season may shape future discussions, the agency still has issues to address, Everson said.

“I hope that after the dust settles on this, both sides take a step back, and can find some way to work cooperatively and make improvements to the tax administration, which are sorely needed,” he added.

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