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1 1 (October 13, 2023)

handle is hein.crs/govends0001 and id is 1 raw text is: Con gressiona Informing the Iegiska 4 Research Service itive debate since 1914 Updated October 13, 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) includes 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. FY2024 IRS Appropriations (billions of dollars) FY2024 H.R. FY2024 4664 S. 2309 FY2023 FY2024 (Mark- (Mark- Account Enacted Request up) up) Taxpayer $2.781 $3.422 $2.781 $2.781 Services Enforcement $5.438 $5.904 $4.206 $5.438 Operations Opert $4.101 $4.520 $4.101 $4.101 Support Business Systems $0.0 $0.290 $0.150 $0.0 Modernization Total $12.320a $14.137 $11.238 $12.319 Sources: IRS's FY2024 Budget justification, Consolidated Appropriations Act, 2023 (P.L. 117-328), S.Rept. 118-61, and H.Rept. 118-145. Notes: a. This figure does not include the $78.9 billion in funding provided by the Inflation Reduction Act or the $1.4 billion partial rescission of those funds by the Fiscal Responsibility Act of 2023. Inflation Reduction Act The IRS FY2024 budget request is the first such request since the enactment of the Inflation Reduction Act (IRA, P.L. 117-169) in August 2022. The act provided the IRS with $78.9 billion 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 services. By the end of August 2023, the IRS had obligated $2.9 billion of its IRA funds; $741.5 million of that amount went to taxpayer services and $193.8 million to enforcement. Reflecting opposition by the House majority to IRA enforcement funding, Congress rescinded $1.4 billion in unobligated IRA enforcement funding in the Fiscal Responsibility Act of 2023 (P.L. 118-5). The rescission does not affect IRA funds for taxpayer services and business systems modernization. Another $20 billion in IRA funds is reportedly to be repurposed through the FY2024 and FY2025 appropriations processes, under an informal agreement between then-House Speaker Kevin McCarthy and President Joe Biden.

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