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June 30, 2023
Internal Revenue Service Appropriations, FY2024
Overview of the IRS Budget
Table 1. IRS’s FY2024 Appropriations
The Internal Revenue Service (IRS) has two primary
(bil ions of dol ars)
responsibilities: (1) collecting most of the revenue to fund
federal government agencies and programs, and (2)
FY2024
enforcing taxpayer compliance with federal tax laws
House
through activities like taxpayer assistance and audits.
bill
FY2024
According to the most recent data, in FY2022, the agency
FY2022
FY2023
(Mark-
processed nearly 263 million tax returns and related forms,
Account
Enacted Enacted Request
up)
collected $4.9 trillion in gross revenue, and issued refunds
Taxpayer
$2.781
$3.422
$2.781
totaling nearly $642 billion.
$2.781
Services
The IRS’s operating budget is a mix of annual
Enforcement
$5.438
$5.438
$5.904
$4.206
appropriations and miscellaneous resources. In FY2023,
appropriations account for 75% ($12.3 billion) of the
Operations
$4.101
$4.520
$4.101
$4.101
budget. The remaining 25% ($4.2 billion) consists of other
Support
resources, including unobligated balances from previous
Business
$0.275
$0.290
$0.150
years, reimbursable items, and $2.8 billion mandated by
Systems
$0.0
P.L. 117-169, commonly referred to as the Inflation
Modernization
Reduction Act (IRA). The IRS has considerable leeway in
how it uses nonappropriated funds.
Total
$12.595 $12.320a
$14.137 $11.238
Historically, IRS appropriations have been distributed
Sources: IRS’s FY2024 Budget Justification, Consolidated
among four accounts: taxpayer services, enforcement,
Appropriations Act, 2023 (P.L. 117-328), and text of House
operations support, and business systems modernization. As
Appropriations Subcommittee on Financial Services and General
Table 1 shows, enforcement has been the largest of the
Government markup.
four, accounting for over 43% of combined FY2022 and
FY2023 appropriations.
Notes:
FY2023 IRS Appropriations
a. This figure does not include any of the funds the IRS received
from Congress to implement pandemic-related tax benefits,
In December 2022, Congress passed the Consolidated
which totaled $3.1 bil ion when they were enacted. The
Appropriations Act, 2023 (CAA, P.L. 117-328), which
supplemental funds came from P.L. 116-136, P.L. 116-260, and
funds most government operations (including the IRS) in
P.L. 117-2. Nor does it include any of the funding authorized by
FY2023. The IRS’s enacted appropriations (see Table 1)
P.L. 117-169, nor the $1.4 bil ion rescission of those funds by
were identical to FY2022 for three of the four
the Fiscal Responsibility Act (FRA, P.L. 118-5).
appropriations accounts; Congress provided no funds for
the business systems modernization program in FY2023.
Markup of House Appropriations
Overview of the FY2024 IRS
Subcommittee Bill (unnumbered) for
Budget Request
FY2024 IRS Appropriations
On June 22, the House Appropriations Subcommittee on
The Biden Administration is requesting $14.1 billion in IRS
Financial Services and General Government marked up a
appropriations for FY2024, 14.7% more than the FY2023
bill to provide appropriations for FY2024, including the
enacted amount. Relative to FY2023, requested taxpayer
IRS. According to the text of the bill, the IRS would receive
service funding is 23.0% greater, enforcement funding
$11.2 billion in appropriations for that year, an amount that,
8.6% greater, and operations support funding 10.2%
if enacted, would be 9% below the agency’s FY2023
greater. Requested business systems modernization funding
funding and would mark the lowest agency funding since
is 5.5% greater than it was it FY2022, the last year
FY2017.
Congress appropriated money for this purpose. Including an
estimated $2.3 billion in other resources, the IRS’s FY2024
P.L. 117-169 (Inflation Reduction Act)
budget request, if enacted, would provide the agency with
The IRS FY2024 budget request is the first such request
an operating budget of $14.9 billion.
since the enactment of IRA in August 2022. The act
According to IRS budget documents, the FY2024 request
provided the IRS with $78.9 in mandatory funding that is
seeks to maintain FY2023 levels of operation and make
available for obligation through FY2031. Of this amount,
significant improvements in taxpayer services,
the act specified that $45.6 billion will go to enforcement,
enforcement, and the business systems modernization
$25.3 billion to operations support, $4.8 billion to business
program, with the aim of lowering the federal tax gap.
systems modernization, and $3.2 billion to taxpayer
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Internal Revenue Service Appropriations, FY2024
services. Both the size of the funding and its distribution
maintenance, information systems development and
among major IRS functions have been a source of
operation, and telecommunications.
continuing controversy.
The IRS is requesting $4.5 billion for operations support in
Reflecting opposition by the House majority leaders to IRA
FY2024. Of that amount, $275 million would remain
enforcement funding, Congress rescinded $1.4 billion in
available for obligation through the end of FY2025; $10
unobligated IRA funding through the Fiscal Responsibility
million would remain available until obligated for the
Act of 2023 (P.L. 118-5). The rescission does not affect
construction and repair of IRS facilities; and $1 million
IRA funds for taxpayer services and business systems
would remain available for research through the end of
modernization.
FY2026.
Under an informal agreement between House Speaker
The budget request allots $1.0 billion to infrastructure
Kevin McCarthy and President Joe Biden, another $20
maintenance and operation, $1.2 billion to shared services
billion in IRA funds will reportedly be repurposed through
and support, and $2.2 billion to information services.
the appropriations process in FY2024 and FY2025. It is
unclear which IRS programs will be affected the most.
Business Systems Modernization
This account pays for expenses related to the business
FY2024 IRS Appropriations
systems modernization (BSM) program, such as the
The requested appropriations for FY2024 are in addition to
acquisition of information technology systems and related
any of the $57.5 billion in remaining IRA mandatory funds.
services.
Taxpayer Services
The IRS is requesting $290 million for the program. This
follows a decision by Congress to provide no BSM
This account pays for prefiling assistance and education,
appropriations in FY2023. The decision was based on the
filing and account services, taxpayer advocacy services, and
view that the IRS could rely on funds for BSM under IRA
associated support costs.
and leftover funds from COVID-19 relief legislation to
The IRS is requesting $3.4 billion in appropriations for
cover FY2023 expenses.
taxpayer services in FY2024. Of this amount, $100 million
BSM funds are used only for the development,
would be available through the end of FY2025. Not less
modernization, and enhancement of the agency’s
than $11 million would go to the Tax Counseling for the
information technology. Funds from the operations support
Elderly program; $26 million to low-income taxpayer
account cover the operation and maintenance costs of
program grants; $40 million (available until September 30,
implemented projects.
2025) to matching grants for the Community Volunteer
Income Tax Assistance program; and $236 million to the
Under the budget request, the IRS would submit quarterly
Taxpayer Advocate Service ($7 million of which would go
reports to the two appropriations committees on the status,
to cases involving identity theft and refund fraud).
cost, and performance results of current BSM projects
The budget request allocates $823 million in appropriations
Administrative Provisions
to taxpayer prefiling assistance and education and $2.6
Appropriations laws generally include administrative
billion in appropriations to filing and account services.
provisions (or riders) that signal congressional priorities in
These amounts include $271 million to improve taxpayer
agency use of appropriated funds.
phone services and $106 million to implement the clean
energy tax credits in the IRA.
The IRS FY2024 budget request includes 14 administrative
provisions, 2 of which are not part of the agency’s FY2023
Enforcement
appropriations. One (Section 113) would grant the IRS
This account covers the costs associated with collecting
direct hiring authority until the end of FY2027 to fill critical
taxes owed, legal and litigation support, criminal
positions for which there is a shortage of “highly qualified
investigations, and enforcement of tax laws.
candidates.” The other, Section 114, would allow the IRS to
use “streamlined critical pay authority” to appoint up to 200
The IRS is requesting $5.9 billion in enforcement
individuals to IRS positions.
appropriations for FY2024. Of this amount, $250 million
would be available through the end of FY2024; $60.3
The FY2024 appropriations measure marked up by the
million would go to the Interagency Crime and Drug
House Appropriations Subcommittee on Financial Services
Enforcement program; and $25 million would be reserved
and General Government includes one provision that is
for the acquisition of “investigative technology” by the
absent from the budget request. It would prevent the IRS
Criminal Investigation Division (CID).
from using FY2024 appropriated funds to “develop or
provide” a free tax-filing option without the approval of the
The budget request allots $818 million to investigations,
appropriations committees, the Senate Finance Committee,
$4.9 billion to audits and collections, and $189 million
and the House Ways and Means Committee.
regulatory activities.
Operations Support
Gary Guenther, Analyst in Public Finance
This account funds the operation of the IRS’s infrastructure,
IF12440
including research and statistics of income, headquarters
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Internal Revenue Service Appropriations, FY2024
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