Republicans hail 2 percent cut to IRS appropriation in omnibus

Senate Republicans are pointing to a $275 million reduction to the Internal Revenue Service’s (IRS) annual appropriations as a win in their end-of-year negotiations on the omnibus spending package.  

Republican leaders are highlighting the reduction in IRS funding at a time when conservatives are calling for fellow Republican lawmakers to punt major spending decisions into next year so the incoming GOP majority in the House can block funding to hire 87,000 new IRS agents. 

Sen. Richard Shelby (Ala.), the senior Republican on the Senate Appropriations Committee, pointed out that the $12.32 billion provided for the IRS in the omnibus is $275 million less than what Congress enacted for fiscal 2022.  

IRS funding falls into four accounts: taxpayer services, operations support, enforcement and business systems modernization. Overall, the omnibus makes a 2 percent cut to the IRS’s appropriation, reducing it from $12.6 billion to $12.3 billion by zeroing out the business systems modernization account, according to a Senate GOP aide. 

Funding for the rest of the agency’s accounts was kept flat.  

Senate Republican Whip John Thune (S.D.) on Tuesday called that funding reduction a “selling point” with Republicans who are on the fence about voting for the omnibus.  

But GOP sources acknowledge that the funding cut is relatively insignificant compared to the $80 billion the IRS received from the Inflation Reduction Act, which passed Congress this summer under the budget reconciliation process without a single Republican vote.  

Sen. John Cornyn (R-Texas), a member of the finance panel’s Taxation and IRS Oversight Subcommittee, said he’s not optimistic about clawing that $80 billion back from the IRS, despite calls from conservative colleagues to do so.  

“The IRS is a big, complex organization, and it’s not been a model of efficiency and innovation, and I worry about dumping a whole bunch of money on it and saying ‘figuring it out’ rather than coming up with a plan we can actually then fund and we can monitor, we can hold it accountable,” he said. “I think the IRS is going to continue to have plenty of money to do its job.”