House GOP Makes Bold Move to Cut IRS Budget and Defund Newly-Promised Free Tax Filing System

House GOP Pushes for IRS Budget Cuts

Republican members of the House are making a firm stand against the Internal Revenue Service's (IRS) budget. Their plan suggests slashing IRS funding significantly. The proposal emerges from the latest financial services and general government bill the House Appropriations Committee released. The bill would result in a budget of $10.1 billion for the IRS in fiscal year 2025. This number is $2.2 billion below what was allotted in fiscal year 2024. Of this, enforcement funding sees the largest cut at $2 billion.

Striking Down Free Online Tax Services

The plan also targets the IRS's promised free online tax filing system. Recent moves have made this service permanent, and they vowed to make it available in more states. The GOP's new approach would end this, precluding funds for any government-run tax preparation software that lacks Congressional authorization.

Republican Stance on Fiscal Responsibility

Rep. Dave Joyce, FSGG Subcommittee Chair, advocated for the bill. He stated it aims to prevent agencies like the IRS from overreaching and unfairly targeting Americans. The proposed budget reflects a growing concern about government spending and the need for fiscal constraint, echoing Republican priorities.

Immediate Democrat Backlash

Democrats have taken a clear stance against these cuts. They argue the move would deny taxpayers a free filing option promised by the IRS. Senate Finance Committee chair Ron Wyden spoke against halting the program's expansion. Additionally, House Appropriations Committee ranking member Rep. Rosa Delauro criticized the bill for its multitude of problematic policy riders.

Funding Fluctuations and Future Projections

The IRS received a substantial funding increase in 2022, with the Inflation Reduction Act providing an additional $80 billion. However, subsequent deals have gradually reduced this amount. For instance, past negotiations led to a commitment to ax $20 billion from the IRA funding through annual appropriations cuts. The latest proposal continues this trend, with fiscal years 2024 and 2025 eyed for significant reductions.

The Current Fiscal and Political Reality

As of the last count at year-end, the IRS had spent only 5.6 percent of the IRA funding. Within the enforcement budget, central to IRS operations, a mere one percent was deployed for specialized auditor hiring by December 31. The current political climate, marked by Republican control of the House, has solidified the party's power to enact its tax and spending agenda despite roadblocks such as Senate opposition.

This latest move represents a stark shift in the status quo, with the Republicans set to reshape the IRS's functionality and reach through financial means. With the bill still to pass through the legislative rigmarole, its ultimate fate remains uncertain, but the direction of House GOP intentions is clear. They seek to reel in IRS activities and curtail the expansion of government-provided tax services.

The ongoing debate and decisions will likely shape the future of tax administration and filing in the United States. The trajectory of the IRS's capabilities and its ability to serve taxpayers hangs in the balance. As these proposals progress, their implications will become more transparent for agencies and taxpayers.