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1 1 (April 8, 2024)

handle is hein.crs/goveoya0001 and id is 1 raw text is: A Congressional Research Service Inforrning the IegsIitive debate since 1914 Updated April 8, 2024 Internal Revenue Service Appropriations, FY2024 Overview of the IRS Budget The Internal Revenue Service (IRS) is responsible for (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 FY2022 data, 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 receipts. In FY2023, appropriations accounted for 75% ($12.3 billion) of the budget. The remaining 25% ($4.2 billion) came from unobligated balances from previous years, reimbursable items, and $2.8 billion in mandatory funding provided by P.L. 117-169 (also referred to as the Inflation Reduction Act, or IRA); more details on the IRA's impact on IRS funding are provided below. The IRS has considerable leeway in its use of miscellaneous funds. IRS appropriations are distributed among four accounts: taxpayer services, enforcement, operations support, and business systems modernization (BSM). As Table 1 shows, enforcement was the largest of the four in FY2023, accounting for 44% of enacted appropriations. Table I. FY2024 IRS Appropriations (billions of dollars) FY2023 FY2024 FY2024 Account Enacted Request Enacted Taxpayer $2.781 $3.422 $2.781 Services Enforcement $5.438 $5.904 $5.438 Operations $4.101 $4.520 $4.101 Support Business Systems $0.0 $0.290 $0.9 Modernization Total $12.320- $14.137 $12.320 Sources: IRS's FY2024 Budget justification; Consolidated Appropriations Act, 2023 (P.L. 117-328); and Further Consolidated Appropriations Act, 2024 (P.L. 118-47). Note: a. This figure does not include the $78.9 billion in funding provided by the Inflation Reduction Act (IRA) or the rescissions in IRA funds that have been enacted in 2023 and 2024. FY2024 Budget Request The Biden Administration requested $14.1 billion in IRS appropriations for FY2024, 14.7% more than the FY2023 enacted amount. Requested taxpayer service funding was 23.0% greater, enforcement funding 8.6% greater, and operations support funding 10.2% greater. Requested BSM funding was 5.5% greater than it was it FY2022, the last year Congress appropriated money for this purpose. Including an estimated $2.3 billion in miscellaneous receipts, the IRS FY2024 budget request would have provided the agency with an operating budget of $14.9 billion. Inflation Red uction Act The IRA provided the IRS with $78.9 billion in mandatory funding that is available for obligation from FY2022 to 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 BSM, and $3.2 billion to taxpayer services. Funds designated for one purpose (e.g., taxpayer services) may not be used for a different purpose (e.g., enforcement). By the end of FY2023, the IRS had obligated $3.5 billion in IRA funds; of that amount, $0.9 billion went to taxpayer services, $0.3 billion to enforcement, $1.5 billion to operations support, and $0.8 billion to BSM. Nearly $2.0 billion (57%) of expended IRA funds in FY2023 were used to pay for normal operating costs and inflation adjustments not covered by enacted appropriations. Congress rescinded $1.4 billion in unobligated IRA enforcement funding in the Fiscal Responsibility Act of 2023 (P.L. 118-5). Another $20.2 billion in IRA money was rescinded in the law (P.L. 118-47) providing appropriations for the IRS in FY2024. This reduced the amount of IRA funds available to the IRS to about $54 billion at the start of FY2024; this included funds already expended. Further Consolidated Appropriations Act, 2024 (L. I &-41) This law provides funding for the IRS in FY2024 at the same total amount as in FY2023. Each of the four accounts are funded at the same levels. (See Table 1.) Taxpayer Services This account pays for prefiling assistance and education, filing and account services, taxpayer advocacy services, and associated support costs. P.L. 118-47 provides $2.781 billion in appropriations for taxpayer services in FY2024. Of this amount, $100 million is available for obligation through the end of FY2025. In

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