Tax Byte

Congress has approved a bipartisan debt limit bill, which avoids a federal government default and takes a sizeable bite out of the IRS’s much-needed makeover funding. See what I did there? The Fiscal Responsibility Act of 2023 (H.R. 3746) now heads to President Biden’s desk where he is expected to sign it as early as today.

The bipartisan bill cleared the Senate on June 1 by a 63-36 vote. The House approved the measure by a 314-117 vote on May 31. Notably, the bill will suspend the federal debt limit through January 1, 2025, and immediately rescind $1.4 billion of the nearly $80 billion in IRS funding provided by the Inflation Reduction Act of 2022 (P.L. 117-169) to revamp the IRS.

Additionally, lawmakers and the Biden Administration have agreed separately to reappropriate $20 billion of IRS funding provided in the IRA over the next two fiscal years. Reportedly, there is a “gentleman’s agreement” between House Republicans and the White House that $10 billion will be taken from the IRS in 2024 and another $10 billion in 2025, which will be repurposed in future appropriations bills. How this impacts the IRS’s efforts toward modernization and increased enforcement remains to be seen. Congress giveth, and Congress taketh away.