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1 1 (June 30, 2023)

handle is hein.crs/govemct0001 and id is 1 raw text is: Congressional Research Service MasM Inforrming the legislitive debate since 191.4 June 30, 2023 Internal Revenue Service Appropriations, FY2024 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 activities like taxpayer assistance and audits. According to the most recent data, in FY2022, the agency processed nearly 263 million tax returns and related forms, collected $4.9 trillion in gross revenue, and issued refunds totaling nearly $642 billion. The IRS's operating budget is a mix of annual appropriations and miscellaneous resources. In FY2023, appropriations account for 75% ($12.3 billion) of the budget. The remaining 25% ($4.2 billion) consists of other resources, including unobligated balances from previous years, reimbursable items, and $2.8 billion mandated by P.L. 117-169, commonly referred to as the Inflation Reduction Act (IRA). The IRS has considerable leeway in how it uses nonappropriated funds. Historically, IRS appropriations have been distributed among four accounts: taxpayer services, enforcement, operations support, and business systems modernization. As Table 1 shows, enforcement has been the largest of the four, accounting for over 43% of combined FY2022 and FY2023 appropriations. FY2023 IRS Appropriations In December 2022, Congress passed the Consolidated Appropriations Act, 2023 (CAA, P.L. 117-328), which funds most government operations (including the IRS) in FY2023. The IRS's enacted appropriations (see Table 1) were identical to FY2022 for three of the four appropriations accounts; Congress provided no funds for the business systems modernization program in FY2023. Overview of the FY2024 IRS Budget Request The Biden Administration is requesting $14.1 billion in IRS appropriations for FY2024, 14.7% more than the FY2023 enacted amount. Relative to FY2023, requested taxpayer service funding is 23.0% greater, enforcement funding 8.6% greater, and operations support funding 10.2% greater. Requested business systems modernization funding is 5.5% greater than it was it FY2022, the last year Congress appropriated money for this purpose. Including an estimated $2.3 billion in other resources, the IRS's FY2024 budget request, if enacted, would provide the agency with an operating budget of $14.9 billion. According to IRS budget documents, the FY2024 request seeks to maintain FY2023 levels of operation and make significant improvements in taxpayer services, enforcement, and the business systems modernization program, with the aim of lowering the federal tax gap. Table I. IRS's FY2024 Appropriations (billions of dollars) FY2024 House bill FY2022 FY2023 FY2024 (Mark- Account Enacted Enacted Request up) Taxpayer $2.781 $2781 $3.422 $2.781 Services Enforcement $5.438 $5.438 $5.904 $4.206 Operations $4.101 $4.101 $4.520 $4.101 Support Business $0.275 $0.290 $0.150 Systems $0.0 Modernization Total $12.595 $12.320a $14.137 $11.238 Sources: IRS's FY2024 Budget justification, Consolidated Appropriations Act, 2023 (P.L. 117-328), and text of House Appropriations Subcommittee on Financial Services and General Government markup. 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. Nor does it include any of the funding authorized by P.L. 117-169, nor the $1.4 billion rescission of those funds by the Fiscal Responsibility Act (FRA, P.L. 118-5). Markup of H ouse Appropriations Subcommrittee Bill (unnumnbered) for FY2024 IRS Appropriations On June 22, the House Appropriations Subcommittee on Financial Services and General Government marked up a bill to provide appropriations for FY2024, including the IRS. According to the text of the bill, the IRS would receive $11.2 billion in appropriations for that year, an amount that, if enacted, would be 9% below the agency's FY2023 funding and would mark the lowest agency funding since FY2017. P.L. 117-169 (Inflation Red tion Act) The IRS FY2024 budget request is the first such request since the enactment of IRA in August 2022. The act provided the IRS with $78.9 in mandatory funding that is available for obligation through FY2031. Of this amount, the act specified that $45.6 billion will go to enforcement, $25.3 billion to operations support, $4.8 billion to business systems modernization, and $3.2 billion to taxpayer

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