The IRS’s Future May Depend on the 2024 Election Outcome

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TL/DR –

The performance of the Internal Revenue Service (IRS) following a multibillion-dollar investment has been the subject of partisan disagreement in Congress, with Republicans stating that the IRS is failing taxpayers and wasting the $80 billion invested in the Inflation Reduction Act. Democrats on the other hand have commended the agency for its progress and efficiency in its operations. This disagreement was evident during a hearing involving IRS Commissioner Daniel Werfel, and is indicative of the battle for control in Congress and the White House in the upcoming 2024 elections, which could decisively influence the future of the agency.


Partisan Disagreements on IRS Multibillion-Dollar Investment

IRS Commissioner Daniel Werfel testified to Congress about the agency’s performance regarding an $80 billion investment. Republicans criticized the IRS for failures and wastage, while Democrats praised the agency’s progress.

A Glimpse into IRS’s Future

The hearing signified potential stakes for the IRS’s future as 2024 elections loom. The political party in control may significantly impact the fate of the agency. Republicans leading the House majority have sought to curtail IRS funding in numerous bills to balance other governmental expenditure.

Debate Over IRS Funding

Republicans have voiced concerns about the IRS’s spending of the $80 billion and its expected revenue from increased audits. Democrats, however, argue that Republicans seek to cut crucial funding to address corporate tax evasion and high wealth tax cheats.

Targeting the ‘Tax Gap’

The IRS aims to utilize the funds to close the ‘tax gap’—taxes legally owed but unpaid. Werfel emphasized that stable funding for the IRS helps reduce the tax gap, which can decrease the federal deficit.

Impact on Revenue

A 2022 CBO report estimated that the IRS funding could increase revenues by over $180 billion from 2022 to 2031. The Treasury Department and the IRS project an increase in tax revenues by as much as $561 billion over the next decade.

Improved Customer Service

Increased funding has led to improvements in customer service for taxpayers contacting the IRS. According to a GAO report published last month, the IRS answered 7.7 million calls during the 2023 filing season, a 65% increase from the previous year.

Potential Roadblocks

Though Republicans agree with maintaining some funding to ensure customer service, partisan politics may impact future legislation. Republicans question the IRS’s request for an additional $800 million this year, raising concerns about the agency’s spending choices.

Funding Dependent on Political Landscape

The future of IRS funding may also rely on the party in control of the White House. President Joe Biden supports long-term IRS funding, while former President Donald Trump has endorsed mixed funding levels.

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