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When will IRS stop ballooning budget? Short answer: Not anytime soon

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Sen. Mike Crapo

By U.S. Sen. Mike Crapo

In his fiscal year (FY) 2025 budget proposal, President Biden requested Congress provide an unprecedented $104 billion in additional funding for the Internal Revenue Service (IRS) on top of its $12.3 billion annual budget and the $80 billion the Biden Administration already enacted in the Inflation Reduction Act (IRA).  Worryingly, when I recently questioned IRS Commissioner Danny Werfel about when the IRS would stop the excessive growth of its federal budget, Commissioner Werfel responded that the proposed increases are intended to become the new norm for the IRS.  This is unacceptable. 

At a recent hearing on the IRS’s budget, I recapped that Commissioner Werfel previously stated the IRS would have a decade to “rebuild” with the $80 billion in IRS funding already authorized.  While many rightly continue to raise questions about that significant increase in funding, which was a five-times or more increase of the IRS budget, the IRS claimed it needed the money to maintain employees and update its systems.  Now, the IRS justifies its request for $104 billion in additional mandatory multi-year spending—or eight-times the agency’s annual budget—as again being needed to maintain IRS employees and update its systems.  When will taxpayers see the end to the staggering growth of the size of the IRS in budget requests?

Historically, IRS annual appropriations have remained largely consistent when adjusted for inflation, and budgets have been generally stable for at least the last two decades.  In 2004, the agency’s budget was $10.4 billion; in 2014, about $12 billion; in 2022, $12.6 billion.  Then came the $80 billion influx in supplemental spending from the IRA, on top of its annual budget.  Last year, when the agency released it strategic plan for the $80 billion, I raised concerns with the plan’s vagueness and missing line-item cost projections.  A year later, we still lack important details.  Instead of providing Congress with a thorough accounting and justification for funds, the President’s budget takes a “just spend more, no questions asked” approach.  This approach is not a solution.

For years, the IRS’s auditors have flagged its failure to effectively plan and identify efficiencies and budgetary savings.  I support the IRS modernizing its technological systems, but the IRS has received decades of stable funding to do this and the results are chronically lackluster.  These improvements do not require $80 billion—much less another $104 billion—but better prioritization and execution.  This modernization should also enable the IRS to become more efficient, reducing its annual funding needs.  In effect, the President’s supersized budget request is asking taxpayers to permanently fund a bloated IRS with no end in sight.

Despite claims the $80 billion in new funding would “transform the IRS into a 21st century agency,” this budget windfall was not a cure.  Instead, it seems taxpayers have paid billions of dollars for mail to actually be opened and phone wait times to decline slightly.  Meanwhile, several million items of taxpayer correspondence remain unanswered and more than half a million ID theft cases remain unresolved—on average, years later.  Supplemental modernization funding is also scheduled to run out years before the IRS finishes planned projects. 

Rather than focus on fixing these and other problems, the bulk of that supplemental funding is dedicated to increased enforcement and used for unnecessary side projects.  The IRS needs to become more efficient, rigorously plan, and provide full transparency to Congress and American taxpayers.  I will continue to use every opportunity to stop the IRS from using more taxpayer dollars to pursue wasteful, redundant programs and impose heavy-handed enforcement on hardworking Americans at the expense of needed improvements to taxpayer services.

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