Nov. 21, 2022

House Republicans Pledge to Take Up Bill to Cut New IRS Funding

With Republicans expected to have a narrow majority in the House of Representatives once the new Congress is sworn in next year, one of the first votes that could be undertaken would rescind additional funding for IRS enforcement.

The Inflation Reduction Act of 2022 provided $45.6 billion in additional enforcement funding to the IRS with the aim of increasing scrutiny on taxpayers with more than $400,000 in taxable income. That could lead to more tax audits on small and family-owned businesses. A proposed law, the Family and Small Business Taxpayer Protection Act, H.R. 9092, would revoke that additional enforcement funding and House Republicans have already pledged to vote on the bill early next year.

Last week, business groups sent a letter to the bill’s sponsor, Rep. Adrian Smith (R-NE), and one of its co-sponsors, Rep. Michelle Steel (R-CA), supporting the passage of the Family and Small Business Taxpayer Protection Act. FEDA was one of the co-signers of the letter.

“It is disheartening that Congress would earmark $45.6 billion (58 percent) for enforcement efforts while only providing $3 billion (4 percent) for taxpayer services from the $80 billion allocated to the IRS in the Inflation Reduction Act of 2022,” the letter states. “Before considering how to penalize taxpayers, the agency should address the immense backlog facing the agency and how to better assist taxpayers with compliance.”

The full letter is available here.