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Updated August 17, 2022
Internal Revenue Service Appropriations, FY2023
Overview of the IRS Budget
and strengthen taxpayer rights and to make the IRS more
The Internal Revenue Service (IRS) has two primary
taxpayer-friendly by bolstering its cybersecurity, adopting
responsibilities: (1) collecting most of the revenue to fund
more advanced technologies, and developing a
federal government agencies and programs, and (2)
comprehensive taxpayer service strategy. Funding for this
enforcing taxpayer compliance with federal tax laws
purpose would come from three accounts: TS ($119
through taxpayer services and activities like audits. In
million), ENF ($54 million), and OS ($147 million).
FY2021, the agency processed 269 million tax returns and
Another $10 million would go to a Mississippi Delta region
collected $4.1 trillion in gross revenue and $75 billion in
hiring initiative, as part of a strategy to reach out to
enforcement revenue.
underserved communities.
The IRS’s operating budget is a blend of annual
Action in the House and the Senate
appropriations and miscellaneous resources. In FY2021,
In July, the House passed a bill (H.R. 8294) that would
90.5% ($11.92 billion) of its operating budget came from
provide $13.6 billion in FY2023 appropriations for the IRS,
appropriations. The remaining 9.5% ($1.25 billion)
which is $1 billion more than the enacted amount for
consisted of (1) reimbursements from other government
FY2022 and $506 million less than the budget request.
agencies for IRS-provided services, (2) offsetting
collections, (3) user fees, and (4) carryovers of unobligated
Also in July, the Senate Appropriations Committee released
balances from previous fiscal years. Congress gives the IRS
the text of a bill for FY2023 appropriations for financial
considerable leeway in how it uses nonappropriated funds.
services and general government. The bill recommended
Historically, IRS appropriations have been distributed
$13.6 billion in IRS appropriations.
among four accounts: taxpayer services (TS), enforcement
(ENF), operations support (OS), and business systems
Table 1. IRS’s FY2022 and FY2023 Appropriations,
modernization (BSM). As Table 1 shows, enforcement has
Excluding Nonappropriated Funds
been the largest of the four in recent years, accounting for
(bil ions of dol ars)
43.2% of FY2022 enacted appropriations. OS was the
second-largest account at 32.6%, followed by TS at 21.1%
FY2022
FY2023
FY2023 FY2023
and BSM at 2.2%.
Account

Enacted Request Housea
Senateb
Overview of the IRS’s FY2023
TS

$2.781
$3.386
$3.411
$3.444
Budget Request
ENF

$5.438
$5.862
$6.120
$6.162
The Biden Administration is requesting $14.1 billion in IRS
appropriations for FY2023, nearly 11.0% more than the
OS

$4.101
$4.543
$3.754
$3.678
FY2022 enacted amount. Requested funding for each of the
BSM

$0.275
$0.310
$0.310
$0.310
four appropriations accounts is also larger. Relative to
FY2022, TS funding is 21.8% greater, ENF funding 7.8%
Total

$12.595c $14.100 $13.595 $13.595
greater, OS funding 10.8% greater, and BSM funding
Sources: IRS’s FY2023 Budget Justification and Consolidated
12.7% greater. Including an estimated $1.1 billion in
Appropriations Act, 2022 (P.L. 117-103), H.R. 8294, Senate
miscellaneous resources, the IRS’s FY2023 operating
Appropriations Committee bil for financial services and general
budget would total $15.2 billion.
government FY2023 appropriations.
In a departure from standard practice, the budget request
adjusts the requested amounts for TS and ENF for
Notes:
“employee support costs.” The adjustment would reduce
a. H.R. 8294 as passed by the House on July 20, 2022.
requested OS FY2023 funding by $709 million and transfer
that amount to TS ($299 million) and ENF ($411 million)
b. Senate Appropriations Committee’s explanatory statement on
to better reflect the actual employment cost for TS and ENF
its FY2023 financial services and general government
functions. This cost encompasses employee compensation,
appropriations bil .
hiring and training costs, and the information technology
and physical space needed to make an employee
c. This figure does not include any of the funds the IRS received
productive. The budget request calls for an “internal
from Congress to implement pandemic-related tax benefits,
reimbursable agreement process” to implement the
which totaled $3.1 bil ion when they were enacted. The
proposed adjustments in FY2023.
supplemental funds came from P.L. 116-136, P.L. 116-260, and
P.L. 117-2.
The budget request also designates $320 million for
implementing the Taxpayer First Act (P.L. 116-250)
provisions. In general, the provisions are intended to codify
https://crsreports.congress.gov

Internal Revenue Service Appropriations, FY2023
Individual Appropriations Accounts
Operations Support (OS)
This account funds the operation of the IRS’s infrastructure,
Taxpayer Services (TS)
including headquarters maintenance, agency information
This account pays for prefiling assistance and education,
systems, and operating expenses for the Internal Revenue
filing and account services, taxpayer advocacy services, and
Service Oversight Board.
associated support costs.
The Administration requests $4.5 billion in OS
The Administration requests $3.4 billion in TS
appropriations in FY2023. Of this amount, $275 million
appropriations in FY2023. Of that amount, $100 million
would be available until the end of FY2024; $10 million
would remain available until the end of FY2024. The
would be available until spent for equipment purchases and
request also specifies that $11 million would be available
the construction, renovation, and repair of facilities; and $1
for the Tax Counseling for the Elderly (TCE) program; $26
million would be available for IRS research through
million for low-income taxpayer clinic (LITC) grants,
FY2025.
which would be limited to $200,000 for a single clinic; $30
million for volunteer income tax assistance (VITA)
H.R. 8294 would provide $3.7 billion in OS appropriations
program matching grants, which would be available
in FY2023, with the same allocation priorities as the budget
through the end of FY2024; and $235 million for the
request.
Taxpayer Advocate Service (TAS), $5.5 million of which
would be reserved for cases involving identity theft and
The Senate committee bill would also provide $3.7 billion
refund fraud.
in OS appropriations in FY2023.
H.R. 8294 would provide the IRS with $3.4 billion in TS
Business Systems Modernization (BSM)
appropriations in FY2023. Of this amount, $100 million
This account pays for expenses related to the BSM
would be available through the end of FY2024. In addition,
program, such as the acquisition of information technology
$11 million would be set aside for the TCE program; $13
systems and related services.
million for LITC grants; $35 million (until September 30,
2024) for VITA matching grants; and $235 million for TAS
The Administration requests $310 million for the BSM
($6 million of which would be used for cases involving
program in FY2023. The request would require the IRS to
identity theft and refund fraud.)
submit quarterly reports (under both the OS and BSM
accounts) to both appropriations committees and the U.S.
The Senate committee bill would provide $3.4 billion in TS
Comptroller General on the status, cost, and results of
appropriations in FY2023. Of this amount, $11 million
“major information technology investments” under the
would go to the TCE program, $26 million to LITC grants,
agency’s Integrated Business Modernization Plan.
$30 million to VITA matching grants (until September 30,
2025), and $235 million to TAS.
H.R. 8294 and the Senate committee bill would also set
funding at $310 million for the BSM in FY2023, with the
Enforcement (ENF)
same reporting requirement.
This account covers costs associated with collecting taxes
owed, legal and litigation support, criminal investigations
Administrative Provisions
and enforcement of tax laws, and purchasing passenger cars
The FY2023 budget request has 11 administrative
for the agency.
provisions (also known as policy riders). Nine of the 11
riders were included in recent appropriations laws. They
The Administration requests $5.9 billion in ENF
address such matters as protecting the confidentiality of tax
appropriations in FY2023. Of this amount, $250 million
information and the First Amendment rights of taxpayers.
would be available through the end of FY2024; $60.3
million would go to the Interagency Crime and Drug
The two other proposed riders would set new precedents.
Enforcement program; and $21 million would be set aside
Section 101 would allow the IRS to transfer up to 6% of the
for the acquisition of “investigative technology” for use by
funds in the ENF account to the TS account if additional
the Criminal Investigation Division (CID).
funds are needed to reduce tax return and taxpayer
correspondence backlogs in FY2023. Section 111 would
H.R. 8294 would appropriate $6.1 billion for enforcement
allow the IRS to repurpose up to $10 million in
in FY2023. Of that amount, $250 million would be
appropriations without the prior consent of those
available until September 30, 2024, and $25 million would
committees.
go to the purchase of “investigatory technology” for the
CID.
H.R. 8294 and the Senate committee bill contain the same
provisions except for Sections 101 and 111. They do,
The Senate committee bill would provide $6.2 billion in
however, include a provision not in the budget request that
funds for enforcement in FY2023. In its explanatory
would allow the IRS to use “direct hire authority” to recruit
statement, the Senate Appropriations Committee
and hire qualified persons for positions involving the
“encourages” the IRS to “prioritize audits of high-income
processing of backlogged tax returns.
individuals and large corporations” and avoid increasing
audits on households with incomes below $400,000.
Gary Guenther, Analyst in Public Finance
IF12098
https://crsreports.congress.gov

Internal Revenue Service Appropriations, FY2023

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https://crsreports.congress.gov | IF12098 · VERSION 3 · UPDATED