Republicans quietly cut IRS funding by $20 billion in bill to avert government shutdown

Republicans quietly made massive progress on their goal to defund the IRS in a last-minute package to avoid a government shutdown.

Through the continuing resolution passed last week, funding the government through March and cutting $20 billion in supplemental funding for the taxation agency, Congress automatically extended cuts passed by the GOP in 2023 to a massive IRS investment.

The Inflation Reduction Act provided an $80 billion apportionment for the IRS aimed at reducing the national debt and providing more resources for the agency to audit ultrawealthy taxpayers. Congress has halved the investment to stop tax cheating since its passage in 2022, cuts that could balloon the federal deficit.

A 2021 report from the Congressional Budget Office indicated that the $80 billion in added IRS funding over 10 years would yield approximately $200 billion in added tax revenue without raising taxes. The Biden administration this week said $140 billion would be added to the debt over a decade due to the cuts, per the Washington Post.

The IRS will likely be forced to cut audits for the ultrawealthy and large corporations first, the most expensive forms of reviews. Anti-taxation advocates rejoiced over the decision, though Treasury officials also noted that cuts could impact customer service operations for regular-income taxpayers.

Deputy Treasury Secretary Wally Adeyemo pointed to the progress the department has made – reducing call wait times to 3 minutes and picking up 85% of calls – as easily unraveled by cuts.

Adeyemo told reporters last month that wait times would balloon to 28 minutes and call pick-up rates would fall to 20% if the cuts stayed in the continuing resolution. Democrats hope a future budget package can reverse the cuts, but Republicans will hold complete budget negotiation power come January.

The GOP has continued to take aim at the revenue-raising department despite its purported mission to reduce the deficit, instead hoping to cut spending to the tune of trillions through the Elon Musk and Vivek Ramaswamy-led Department of Government Efficiency. Still, critics say any cuts that could close the deficit at the magnitude of IRS funding would also impact crucial Social Security and Medicare funding.