House committee proposes $1B funding boost for IRS

A congressional appropriations committee wants to give the Internal Revenue Service $1 billion more in funding to improve taxpayer service and technology and make the overall tax system fairer.

The House Appropriations Committee released its draft fiscal year 2023 Financial Services and General Government funding bill on Tuesday, which is being considered by a subcommittee Wednesday. The legislation provides annual funding for the Treasury Department, the judiciary, the Executive Office of the President, and other agencies, including the Small Business Administration.

For FY 2023, the bill provides a total of $15.6 billion in discretionary appropriations for the Treasury Department, an increase of $1.3 billion above the level enacted in fiscal 2022. Of the total provided for the Department of the Treasury, the bill includes $13.6 billion for the IRS, an increase of $1.0 billion above the FY 2022 enacted level. Included are increases to improve customer service, enforce fairness in the tax system, and modernize IRS systems.

Of the total amount, the bill includes $3.4 billion, an increase of $630 million above fiscal year 2022’s enacted level, for taxpayer services. That includes support for the Volunteer Income Tax Assistance Matching Grants Program, Low Income Taxpayer Clinic, the Taxpayer Advocate, Tax Counseling for the Elderly, and more employees to improve IRS customer service.

There’s also $6.1 billion, a boost of $682 million, above the enacted level for FY 2022, for enforcement. The funds will support increased enforcement efforts and more essential personnel.

Also in the package is $3.8 billion for IRS overhead functions for operations support.

To improve the IRS’s antiquated technology systems, the package includes $310 million, an increase of $35 million above 2022’s level, for business systems modernization to update the IRS’s legacy systems, some of which date back to the 1960s, and improve IRS web applications and tax filing processing.

The IRS headquarters in Washington.

Andrew Harrer/Bloomberg

“By increasing resources for [the] Internal Revenue Service, we are helping the agency provide better customer service and crack down on big corporations and the wealthy who are not paying their fair share in taxes,” House Appropriations Committee chair Rosa DeLauro, D-Connecticut, said in a statement. “I am also particularly proud of strong funding increases to help underserved entrepreneurs and small businesses access capital and contracting opportunities. With these resources and funding to protect the integrity of our elections, we are safeguarding our democracy, growing our economy, and investing in the programs that matter most to working families.”

To ensure the money is being spent carefully, there’s also funding for inspector generals at the Treasury Department, including the Treasury Inspector General for Tax Administration. The package includes $253 million for inspectors general offices across the Treasury in fiscal 2023, an increase of $13 million above the enacted level for fiscal 2022, to provide robust oversight of departmental policies and practices.

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