House Appropriations Bill Cuts IRS Funding by $236 Million

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By Colleen Murphy

May 24 — The House Appropriations Committee cut IRS funding in its annual bill, allocating $10.9 billion for fiscal year 2017.

That amount represents a $236 million reduction from current funding (242 DTR G-6, 12/17/15).

It is also $1.3 billion below the White House budget request. Still, the committee said in a statement that the amount “provides sufficient resources” for the agency.

“Our bill reduces funding for agencies that we believe can produce results with fewer dollars. And, where there is a history of inappropriate behavior, such as the Internal Revenue Service, cutbacks and reforms are recommended to hold them accountable,” Rep. Ander Crenshaw (R-Fla.), chairman of the Financial Services Subcommittee, said in a statement. The subcommittee will mark up the appropriations bill on May 25.

Congress has slashed IRS funding by more than $900 million since 2010.

Funding Breakdown

The bill provides an additional $290 million to improve customer service, prevent fraud and enhance cybersecurity. Identity theft has been a challenge for the agency, which has announced plans to retool its Get Transcript program after a massive data breach. The House also passed a bill earlier this month to establish a single point of contact for identity theft victims (95 DTR G-2, 5/17/16).

Funding for taxpayer services—including filing and taxpayer advocate services—would hold steady at its current level of $2.1 billion under the bill.

‘Tightly Hold the Reins.'

The bill laid out more than a dozen provisions—some of which mirror last year's—and requires extensive reporting on IRS expenditures.

“The job of this bill is two-fold: to make wise investments with taxpayer dollars in the programs and agencies that we need to grow our economy and enforce our laws, and to tightly hold the reins on the over-spending and overreach within federal bureaucracies,” House Appropriations Chairman Harold Rogers (R-Ky.) said in a statement.

The bill would bar the IRS from using the funds to produce unnecessary videos or spend money on conferences that don't adhere to a strict set of standards. The IRS also wouldn't be allowed to use the funds for bonuses or to rehire former employees without considering their conduct and tax compliance.

The IRS would be prohibited from using funds to target groups based on their ideological beliefs or for exercising First Amendment rights—a restriction that is a nod to a years-long outcry over the IRS allegedly singling out conservative groups applying for tax-exempt status.

At a May 24 House Judiciary Committee hearing on the topic, Rep. Jason Chaffetz (R-Utah) said conservative groups may still be getting extra scrutiny from the agency.

Commissioner John Koskinen “has not resolved that problem, and it exists today,” Chaffetz said (see related story in this issue).

ACA Implementation Ban

The bill includes a provision to keep the IRS from further implementing the Affordable Care Act (Public Law 111-148), and includes a prohibition on using funds to institute an individual insurance mandate.

House Ways and Means Committee ranking member Sander Levin (D-Mich) said in a May 24 statement that barring the IRS from implementing the ACA would take health insurance from 20 million Americans.

“Republicans must put an end to these attacks on the IRS for political gain, and realize that their proposals have real consequences for hardworking Americans,” he said.

Harsh Criticism

Levin slammed House Republicans for the budget proposal, saying it shows they “still don't grasp the consequences of their actions.”

“Cuts made by Republicans to the IRS's budget since 2010 have resulted in terrible customer service, outdated technology, and the lowest level of audits in a decade,” he said.

Just slightly more than one-third—about 37 percent—of taxpayer calls were answered during the 2014 filing season, and IRS employees were allowed to answer only the most basic questions (223 DTR G-3, 11/19/15).

The National Treasury Employees Union, which represents IRS employees, said in a statement that additional budget cuts will hurt the agency and “degrade its already impaired ability to provide taxpayers with the assistance they need.”

The agency has cut more than 15,000 full-time employees as a result of budget restrictions, the group said, adding that the IRS claims it will lose 2,000 to 3,000 full-time employees through attrition by the end of this fiscal year.

To contact the reporter on this story: Colleen Murphy in Washington at

To contact the editor responsible for this story: Brett Ferguson at

For More Information

Text of the IRS-related provisions of the appropriations bill is in TaxCore.