Democrats fume over proposed IRS cuts

Democrats are fuming mad over Republican proposals to scale back IRS funding and defund the agency’s new free online tax filing system.

House Ways and Means Democrats called Republicans’ latest Financial Services and General Government (FSGG) funding bill “disastrous” in a Thursday statement, blasting the GOP for risking another fight over spending that led to the downgrading of U.S. creditworthiness by a major ratings agency last year.

“It seems like Republicans’ 2023-2024 appropriations disaster wasn’t enough for their conference. … Just three months after Democrats once again governed from the minority and staved off the worst of Republicans’ chaos and cuts, the GOP is back with another set of extreme, unworkable bills,” they wrote.

Republicans proposed Tuesday reducing the IRS enforcement budget by $2 billion and funding the agency to the tune of $10.1 billion for fiscal 2025, which would be $2.2 billion below 2024 levels.

Ways and Means Democrats described the cuts as “drastic.”

House Appropriations Committee Chair Tom Cole (R-Okla.) said Tuesday that the bill “protects taxpayers and constrains the burdensome hands of unelected bureaucrats.”

Top Democratic appropriator Steny Hoyer (Md.) voiced dismay about IRS funding at the FSGG markup Wednesday.

“We need to meet President Biden’s request to fund the IRS at the fiscal year ‘24 levels. Ideally, we provide additional funding beyond the request to offset the recent rescissions to the agency,” he said.

Republicans’ desired cancellation of IRS’s Direct File online tax filing program, which was piloted this year in 12 states and recently made permanent by the Treasury Department, was also troubling for Hoyer.

“If the government requires Americans to pay their taxes, we ought to also give them a free and easy way to do so. I frankly have difficulty understanding why we don’t have that service if we want to make paying taxes legally and easily possible,” he said.

The Treasury Department has been defending its Direct File program assiduously, arguing it fills a glaring need in the tax system. Americans spend $270 and 13 hours filing their taxes on average, a Treasury official told The Hill on Tuesday, citing the IRS taxpayer burden survey.

The IRS received an initial $80 billion funding boost in Democrats’ 2022 Inflation Reduction Act, to be spent over the subsequent decade. That amount has since been scaled back by a quarter in the form of regular appropriations cuts as a result of Republican opposition.