Article Summary –
President Biden has requested $104 billion in additional funding for the Internal Revenue Service (IRS) in the 2025 fiscal year budget proposal, atop the $12.3 billion annual budget and an already enacted $80 billion through the Inflation Reduction Act. U.S. Senator Mike Crapo expressed concern over the excessive growth of the IRS budget, noting that the organization’s funding has remained largely stable for the past two decades. Crapo criticised the IRS for not effectively planning or identifying efficiencies, and further emphasized the need for budgetary savings and modernization without such significant increases in spending.
President Biden’s Fiscal Year (FY) 2025 Budget Proposal: A Considerable Increase for the IRS
In his FY 2025 budget proposal, President Biden has requested Congress to approve an unprecedented additional $104 billion in funding for the Internal Revenue Service (IRS). This is on top of IRS’s $12.3 billion annual budget and the previously enacted $80 billion in the Inflation Reduction Act (IRA).
Concerns are growing over the disproportionate increases in the IRS budget. IRS Commissioner Danny Werfel recently suggested that these increases are meant to become the new norm, alarming many who view this as excessive financial growth.
IRS Budget Growth Continues Unabated
Recently, a hearing on the IRS’s budget revealed that despite a five-times increase in the IRS budget with the already authorized $80 billion funding, the IRS is requesting an additional $104 billion. The agency claims that this mandatory multi-year spending is again needed for maintaining its employees and updating its systems, leading to questions about the end of such staggering budget growth.
A History of Stable IRS Budgets
Traditionally, IRS budgets have remained largely consistent when adjusted for inflation. The agency’s budget moved from $10.4 billion in 2004, to about $12 billion in 2014, and to $12.6 billion in 2022. However, the $80 billion influx from the IRA on top of its annual budget has raised concerns regarding transparency and justification of fund usage.
IRS’s Ineffective Planning and Execution
IRS auditors have consistently flagged the agency’s failure to effectively plan and identify efficiencies. While modernizing the IRS’s technological systems is necessary, it should not require such exorbitant funds. Better prioritization and execution can achieve modernization and make the IRS more efficient, reducing its yearly funding needs.
Claims of Transformation into a 21st Century Agency
Despite promises that the $80 billion in new funding would “transform the IRS into a 21st century agency,” we see little evidence of this. Taxpayers continue to face unresolved issues, including unanswered correspondence and unresolved ID theft cases. Moreover, modernization funding is expected to run out before the completion of planned projects.
Need for Efficiency and Transparency
Instead of funding side projects and increased enforcement, the IRS should focus on becoming more efficient and providing full transparency. Rigorous planning is necessary to prevent wasting taxpayer dollars on redundant programs and enforce necessary improvements to taxpayer services.
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