House panel advances spending bill with funding boost to IRS

A House subcommittee on Wednesday advanced a financial services spending bill for fiscal 2021 that would increase the IRS’s budget by roughly $600 million.

The House Appropriations Committee’s financial services and general government subcommittee approved the measure by voice vote. The measure now heads to the full committee, where lawmakers will give it further scrutiny and debate amendments.

The bill covers portions of the federal government that include the Treasury Department, the federal judiciary, the executive office of the president, the Small Business Administration, the Securities and Exchange Commission and the Federal Communications Commission.

It includes a total of $24.64 billion in discretionary funding, which is about $800 million more than the enacted level for this year. It also includes $61 billion for broadband infrastructure and $6 billion for modernizing federal buildings, in an effort to respond to the coronavirus pandemic and related economic downturn.

Much of the funding in the bill, $13.66 billion, would go to the Treasury Department.

Of that amount, $12.1 billion would go to the IRS, an increase of about $600 million over the enacted level for the agency this year. The agency would receive funding increases for taxpayer services, enforcement, operations support and business systems modernization.

The IRS saw its budget cut significantly in the early part of the last decade, after Republicans had taken control of the House, leading to a substantial decline in the agency’s workforce. The IRS has received increases to its budget more recently, but its budget is still below where it was in fiscal 2010 after adjusting for inflation.

Democrats, who now control the House, have been pushing to increase the IRS’s budget so that it can better help taxpayers and increase its enforcement efforts against high-income people. President Trump has also proposed increasing the IRS’s budget, calling for a budget for the agency in fiscal 2021 of $12 billion. 

Rep. Mike Quigley (D-Ill.), chairman of the financial services and general government subcommittee, touted the funding boost to the IRS in the bill, saying that it would “support enforcement activities that equally address taxpayers in all brackets, put consumer service first by reducing wait times, and increase support to individuals trying to navigate the complex tax code.”

The Congressional Budget Office (CBO) estimated in a report released Wednesday that increasing the IRS’s funding for collections and enforcement by $20 billion over a decade would increase revenue by $61 billion, and that increasing this funding by $40 billion over 10 years would raise revenue by $103 billion. The CBO said that these estimates are uncertain and only take into account direct effects.

The bill would not relocate the U.S. Secret Service from the Department of Homeland Security back to Treasury, as the Trump administration has proposed. 

The bill also rejects a proposal in Trump’s budget request to eliminate funding for Community Development Financial Institutions Fund grant and loan programs. The administration has said that federal funding for the grant and loan programs is no longer needed because the financial institutions should have access to private capital, but lawmakers have argued that the funding is helpful to underserved communities.

Rep. Kay Granger (Texas), the top Republican on the full Appropriations Committee, expressed concerns about the overall amount of spending in the bill.

“We should look for efficiencies in government activities, not increase funding for them as this bill does,” she said.

—Updated at 4:32 p.m.