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1 1 (May 6, 2022)

handle is hein.crs/govefsb0001 and id is 1 raw text is: C ongressiona R e e rhUe c S May 6, 2022 Internal Revenue Service Appropriations, FY2023 Overview of the IRS Budget The Internal Revenue Service (IRS) has two primary responsibilities: (1) collecting most of the revenue to fund federal government agencies and programs, and (2) enforcing taxpayer compliance with federal tax laws through taxpayer services and activities like audits. In FY2021, the agency processed 269 million tax returns and collected $4.1 trillion in gross revenue and $75 billion in enforcement revenue. The IRS's operating budget is a blend of annual appropriations and miscellaneous resources. In FY2021, 90.5% ($11.92 billion) of its operating budget came from appropriations. The remaining 9.5% ($1.25 billion) consisted of (1) reimbursements from other government agencies for IRS-provided services, (2) offsetting collections, (3) user fees, and (4) carryovers of unobligated balances from previous fiscal years. Congress gives the IRS considerable leeway in how it uses nonappropriated funds. Historically, IRS appropriations have been distributed among four accounts: taxpayer services (TS), enforcement (ENF), operations support (OS), and business systems modernization (BSM). As Table 1 shows, enforcement has been the largest of the four in recent years, accounting for 43.2% of FY2022 enacted appropriations. OS was the second-largest account at 32.6%, followed by TS at 21.1% and BSM at 2.2%. Overview of the IRS's FY2023 Budget Request The Biden Administration is requesting $14.10 billion in IRS appropriations for FY2023, nearly 11.0% more than the FY2022 enacted amount. Requested funding for each of the four appropriations accounts is also larger. Relative to FY2022, TS funding is 21.8% greater, ENF funding 7.8% greater, OS funding 10.8% greater, and BSM funding 12.7% greater. Including an estimated $1.11 billion in miscellaneous resources, the IRS's FY2023 operating budget would total $15.21 billion. In a departure from standard practice, the budget request adjusts the requested amounts for TS and ENF for employee support costs. The adjustment would reduce requested OS FY2023 funding by $709 million and transfer that amount to TS ($298.9 million) and ENF ($410.7 million) to better reflect the actual employment cost for TS and ENF employees. This cost encompasses an employee's compensation, hiring and training costs, and the information technology and physical space to make an employee productive. The budget request calls for an internal reimbursable agreement process to implement the proposed adjustments in FY2023. The budget request also designates $320.2 million for implementing the Taxpayer First Act (P.L. 116-250) provisions. In general, the provisions are intended to codify and strengthen taxpayer rights and to make the IRS more taxpayer-friendly by bolstering its cybersecurity, adopting more advanced technologies, and developing a comprehensive taxpayer service strategy. Funding for this purpose would come from three accounts: TS ($119.0 million), ENF ($54.3 million), and OS ($146.8 million). Another $10.2 million would go to a Mississippi Delta region hiring initiative, as part of a strategy to reach out to underserved communities. Table I. IRS's FY2022 and FY2023 Appropriations, Excluding Nonappropriated Funds (billions of dollars) FY2023 FY2022 FY2023 Requesta Account Enacted Request (Adjusted) TS $2.781 $3.386 $3.685 ENF $5.438 $5.862 $6.272 OS $4.101 $4.543 $3.834 BSM $0.275 $0.310 $0.310 Total $12.595b $14.100 $14.100 Sources: IRS's FY2023 Budget Justification and Consolidated Appropriations Act, 2022, (P.L. 117-103). Notes: a. Transfers $709 million from OS to TS and ENF to account for support costs associated with employing someone in the latter two activities. b. This figure does not include any of the funds the IRS received from Congress to implement pandemic-related tax benefits, which totaled $3.14 billion when they were enacted. The supplemental funds came from P.L. 116-136, P.L. 116-260, and P.L. 117-2. Individual Appropriations Accounts Taxpayer Services (TS) This account funds prefiling assistance and education, filing and account services, taxpayer advocacy services, associated support costs, and other services authorized by 5 U.S.C. §3109. The Administration requests $3.69 billion in adjusted appropriations for TS in FY2023. Of that amount, $100 million would remain available until the end of FY2024. The request also specifies that $11 million would be available for the Tax Counseling for the Elderly program; $26 million for low-income taxpayer clinic grants (which would be limited to $200,000 for a single clinic); $30 million for volunteer income tax assistance program ittps://trsreports.congress.gt

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