IRS To Receive $12.6B in Funding For FY22 Which is a $675 Million Funding Increase From FY21

The IRS will see a $675 million funding increase in fiscal year 2022 that will allow it to focus more resources on providing taxpayer services under a $12.6 billion budget that President Joe Biden is expected to sign by Tuesday. 

House lawmakers voted to give the agency its largest budget increase in two decades in an early morning vote Wednesday and the Senate put its stamp of approval on the budget legislation a day later, sending the measure to the White House.  

The Measure Includes A Hefty 6% Increase Overall
For The IRS Although That Figure Falls Short Of The
Original 14% Increase Originally Proposed.

The measure does not include a tax title or provisions extending retirement security legislation.

The Internal Revenue Service budget was included in a $1.5 trillion omnibus appropriations bill, or H.R. 2471, to fund operations of the entire federal government through the end of September. Biden is expected to sign the legislation next week, a White House spokesperson said, adding that he plans to sign a separate, short-term continuing resolution bill Friday to keep the government open through March 15. 

The House voted 260-171 to pass the bill, and the Senate passed it in a 68-31 vote.

"This 6.7% Increase Is The Largest In Four Years
For Nondefense Programs," Leahy Said. "

The IRS budget makes up the largest portion of the U.S. Department of the Treasury's $14.3 billion budget for 2022. Treasury's budget would be roughly $811 million above last year's funding level, allowing Treasury's Inspector General offices to boost oversight of the IRS and other agencies.

• The IRS budget would direct $2.7 billion to fund taxpayer services, which includes processing tax returns and answering telephone inquiries. That amounts to $225 million more than the last fiscal year, but $160 million less than what Biden and the Democrats had sought.
• The budget would also provide $5.5 billion for enforcement activities, roughly $173 million more than in 2021; $4.1 billion for operational support, about $172 million more than last year; and $275 million for business systems modernization, about $52 million more.

The IRS budget also includes several policy directives added by lawmakers to increase their oversight of the agency's activities.

• Within 30 days of Biden signing the legislation, the IRS would have to brief Congress on the status of the backlog in tax returns and correspondence, and provide a strategy and time frame for corrective action. 
• Within 60 days of the bill's signing, the IRS would have to brief Congress on the tax gap, focusing on its composition and the taxpayers that are neglecting to pay their tax liabilities. It would also have to provide a report on how the agency determines its audit policies.

The legislation also would allow the agency to increase funding for taxpayer services by transferring funds from enforcement and operation support activities. It would also give the agency the authority to hire additional staff to work on the backlog.

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