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a Congressional Research Service
Informing the legislative debate since 1914
Updated April 10, 2023
Internal Revenue Service Appropriations, FY2023
Overview of the I RS 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 that 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. The IRS has
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 suggests, ENF has been
the largest of the four in recent years, accounting for just
over 44% of FY2023 enacted appropriations.
Overview of the FY2023 IRS
Budget Request
The Biden Administration requested $14.1 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, requested TS funding was 21.8% greater, ENF
funding 7.8% greater, OS funding 10.8% greater, and BSM
funding 12.7% greater. Including an estimated $1.1 billion
in miscellaneous resources, the IRS's FY2023 operating
budget would have totaled $15.2 billion.
In a departure from standard practice, the budget request
adjusted the requested amounts for TS and ENF for
employee support costs. The adjustment would have
reduced requested OS FY2023 funding by $709 million and
transferred that amount to TS ($299 million) and ENF
($411 million), to more accurately reflect actual
employment costs for TS and ENF activities. These costs
encompass employee compensation, hiring and training
costs, and the information technology and office space to
allow employees to be productive.
The budget request also set aside $320 million for
implementing the Taxpayer First Act (P.L. 116-25)
provisions. In general, the provisions codify and strengthen
taxpayer rights and compel the IRS to become more
taxpayer-friendly by bolstering its cybersecurity, adopting
more advanced interactive technologies, and developing a
comprehensive taxpayer service strategy. Funding for this
purpose would have come from three accounts: TS ($119
million), ENF ($54 million), and OS ($147 million).
Another $10 million was reserved for a Mississippi Delta
hiring initiative, as part of IRS efforts to reach out to
underserved communities.
Action in the House and the Senate
In December 2022, Congress passed a bill (P.L. 117-328,
Consolidated Appropriations Act [CAA], 2023) funding
most government operations in FY2023, including the
IRS's. The agency's enacted appropriations (see Table 1)
were identical to FY2022 for three of the four
appropriations accounts; the only difference is that
Congress provided no funds for the BSM program in
FY2023.
Table I. IRS's FY2023 Appropriations, Excluding
Nonappropriated Funds
(billions of dollars)
FY2022 FY2023 FY2023
Account Enacted Request Enacted
TS $2.781 $3.386 $2.781
ENF $5.438 $5.862 $5.438
Os $4.101 $4.543 $4.101
BSM $0.275 $0.310 $0
Total $12.595 $14.100 $12.320-
Sources: IRS's FY2023 Budget justification and Consolidated
Appropriations Act, 2023 (P.L. 117-328).
Notes:
a. This figure does not include any of the funds the IRS received
from Congress to implement pandemic-related tax benefits,
which totaled $3.1 billion when they were enacted. The
supplemental funds came from P.L. 116-136, P.L. 116-260, and
P.L. 117-2.
P.. I 17169 (Inflation Reduction Act)
In August 2022, President Biden signed into law P.L. 117-
169, commonly called the Inflation Reduction Act or IRA,
which included $78.9 billion in mandatory funding for the
IRS; the funds are available for obligation until September
30, 2031. The law specified how that amount should be
distributed among the IRS's four appropriations accounts.
These funds are available regardless of the amounts
received by the IRS through annual appropriations. The
figures in Table 1 exclude IRA's mandatory funding. This
is the first time that Congress has approved multiyear
funding for the IRS's appropriations accounts.](ViewImageLocal?handle=hein.crs/govelfp0001&div=1&collection=&method=preview&ext=.png&size=3)