Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…
Congress has clawed back about 25% of the IRS’s $80 billion in funding from the Inflation Reduction Act. President Biden made a key IRS concession in the recent debt limit deal. Biden agreed to reallocate $10 billion of the IRS’s windfall in 2024 and another $10 billion in 2025 to other spending priorities. Plus $1.4 billion more was cut. This means the IRS will now get nearly $59 billion over ten years for enforcement, modernization, etc., and not $80 billion.
It’s unclear how this will affect the IRS’s future activities. A Treasury official said that this funding drop won’t fundamentally change what the IRS plans to do over the course of the next few years, but it may cause the IRS to come back to Congress and ask for additional funds in six or so years.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But what’s to stop Republican lawmakers from demanding further cuts in the IRS’s funding? Republicans in the House and Senate have blasted the IRS’s additional funding from the moment it was enacted in August 2022. In fact, the first bill that passed the House after the GOP took control in January was to repeal most of the IRS’s $80 billion windfall. That bill died in the Senate. Republicans didn’t get everything they wanted in the debt limit deal when it came to the IRS. But expect them to stay persistent. Attacking the IRS is red meat for their voters.
And what will stop President Biden — or whoever the next president is — from making more concessions on the IRS funding front? Many tax experts didn’t think that Biden would agree to touch the IRS’s funding in the debt limit deal, and they were wrong.
Right now, the IRS will likely stay the course, but only time will tell what the real impact will be.
This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.
More from Kiplinger
-
Donating Complex Assets Doesn't Have to Be ComplicatedIf you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
-
Travel trends you can expect this summerThe Kiplinger Letter Domestic trips will trump foreign travel amid economic uncertainties, though some costs are down.
-
The IRS is in ChaosThe Tax Letter DOGE, departures, data agreements and more are creating havoc at the IRS.
-
Should You Do A Roth IRA Conversion? Nine Things to ConsiderThe Tax Letter Thinking of converting a traditional IRA to a Roth IRA? The Kiplinger Tax Letter Editor highlights nine factors you should consider before making a move.
-
Expiring Business Tax Breaks And Trump's Tax PlanThe Tax Letter Four important business tax breaks are likely to be a part of President Trump's tax plan. We'll break them down for you.
-
AMT and Pass-Throughs Add Complex Layers to 2025 SALT Tax PlanningThe Tax Letter The state and local tax (SALT) deduction is a key sticking point in President Trump's tax plan.
-
Popular Tax Breaks Are in DangerThe Tax Letter A number of tax breaks, including the home mortgage interest deduction, are in peril as lawmakers hunt for revenues to pay for the President's tax plan.
-
Six Hurdles for Trump's Tax BillThe Tax Letter While the odds for a new tax bill in 2025 are quite good, there are some sticking points that President Trump and Congress will have to work through.
-
The IRS is Pursuing Partnerships and Their OwnersThe Tax Letter The IRS has many enforcement priorities, and partnership tax noncompliance is near the top of that list.
-
New Law Delivers Tax Breaks to Natural Disaster Victims, But Is It Enough?Tax Relief The legislation provides critical tax relief to thousands of natural disaster victims across the country.
