In 2022, the IRS received $80 billion in multi-year funding under the Inflation Reduction Act (IRA), but $20 billion has since been clawed back. Now that we know the outcome of the November 2024 election, this funding could be further reduced.
The IRS’s regular appropriations, which have decreased in inflation-adjusted terms since 2010, have led to a shrinking workforce and outdated technology, while the tax gap continues to grow.
The IRA funding was intended to supplement annual appropriations and provide resources for enforcement, technology modernization, and taxpayer services. Of the $80 billion, about $46 billion was allocated for enforcement, focusing on large corporations and high-net-worth individuals.
If Republicans control the White House and Congress, IRS funding may be significantly reduced, including further clawbacks of IRA money. As of the writing of this blog, Republicans have won the Senate, but the House is still too close to be determined.
If both houses have a red majority, it will be much easier for President Trump to change how much funding is allocated to the IRS. The next few years, particularly during negotiations around extending provisions of the 2017 Tax Cuts and Jobs Act, will determine the fate of IRS funding.
The effect of the November presidential election on IRS funding | Accounting Today
