Internal Revenue Service Appropriations, FY2024

Internal Revenue Service Appropriations, FY2024

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Updated April 8, 2024
Internal Revenue Service Appropriations, FY2024
Overview of the IRS Budget
FY2024 Budget Request
The Internal Revenue Service (IRS) is responsible for (1)
The Biden Administration requested $14.1 billion in IRS
collecting most of the revenue to fund federal government
appropriations for FY2024, 14.7% more than the FY2023
agencies and programs, and (2) enforcing taxpayer
enacted amount. Requested taxpayer service funding was
compliance with federal tax laws through activities like
23.0% greater, enforcement funding 8.6% greater, and
taxpayer assistance and audits. According to FY2022 data,
operations support funding 10.2% greater. Requested
the agency processed nearly 263 million tax returns and
business systems modernization (BSM) funding was 5.5%
related forms, collected $4.9 trillion in gross revenue, and
greater than it was it FY2022, the last year Congress
issued refunds totaling nearly $642 billion.
appropriated money for this purpose. Including an
The IRS’s operating budget is a
estimated $2.3 billion in miscellaneous receipts, the IRS
mix of annual
FY2024 budget request would have provided the agency
appropriations and miscellaneous receipts. In FY2023,
with an operating budget of $14.9 billion.
appropriations accounted for 75% ($12.3 billion) of the
budget. The remaining 25% ($4.2 billion) came from
Inflation Reduction Act
unobligated balances from previous years, reimbursable
The IRA provided the IRS with $78.9 billion in mandatory
items, and $2.8 billion in mandatory funding provided by
funding that is available for obligation from FY2022 to
P.L. 117-169 (also referred to as the Inflation Reduction
FY2031. Of this amount, the act specified that $45.6 billion
Act or IRA); more details on the IRA’s impact on IRS
will go to enforcement, $25.3 billion to operations support,
funding are provided below. The IRS has considerable
$4.8 billion to BSM, and $3.2 billion to taxpayer services.
leeway in its use of miscellaneous funds.
Funds designated for one purpose (e.g., taxpayer services)
may not be used for a different purpose (e.g., enforcement).
IRS appropriations are distributed among four accounts:
taxpayer services, enforcement, operations support, and
By the end of FY2023, the IRS had obligated $3.5 billion in
business systems modernization. As Table 1 shows,
IRA funds; of that amount, $0.9 billion went to taxpayer
enforcement was the largest of the four in FY2023,
services, $0.3 billion to enforcement, $1.5 billion to
accounting for 44% of enacted appropriations.
operations support, and $0.8 billion to BSM. Nearly $2.0
Table 1. FY2024 IRS Appropriations
billion (57%) of expended IRA funds in FY2023 were used
(bil ions of dol ars)
to pay for normal operating costs and inflation adjustments
not covered by enacted appropriations.
FY2023
FY2024
FY2024
Account
Enacted Request Enacted
Congress rescinded $1.4 billion in unobligated IRA
enforcement funding in the Fiscal Responsibility Act of
Taxpayer
$2.781
$3.422
$2.781
2023 (P.L. 118-5).
Services
Enforcement
$5.438
$5.904
$5.438
Another $20.2 billion in IRA money was rescinded in the
law (P.L. 118-47) providing appropriations for the IRS in
Operations
$4.101
$4.520
$4.101
FY2024. This reduced the amount of IRA funds available to
Support
the IRS to about $54 billion at the start of FY2024; this
Business
included funds already expended.
Systems
$0.0
$0.290
$0.9
Further Consolidated Appropriations
Modernization
Act, 2024 (P.L. 118-47)
Total
$12.320a
$14.137
$12.320
This law provides funding for the IRS in FY2024 at the
Sources: IRS’s FY2024 Budget Justification, Consolidated
same total amount as in FY2023. Each of the four accounts
Appropriations Act, 2023 (P.L. 117-328), and Further Consolidated
are funded at the same levels. (See Table 1.)
Appropriations Act, 2024 (P.L. 118-47).
Taxpayer Services
Notes:
This account pays for prefiling assistance and education,
a.
filing and account services, taxpayer advocacy services, and

This figure does not include the $78.9 bil ion in funding provided
by the Inflation Reduction Act (IRA) or the rescissions in IRA
associated support costs.
funds that have been enacted in 2023 and 2024.
P.L. 118-47 provides $2.781 billion in appropriations for
taxpayer services in FY2024. Of this amount, $100 million

is available for obligation through the end of FY2025. In
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Internal Revenue Service Appropriations, FY2024
addition, not less than $12 million is for the Tax Counseling
P.L. 118-47 provides no appropriations for the BSM
for the Elderly program; not less than $28 million for Low-
program in FY2024. Congress also provided no funding for
Income Taxpayer Clinic grants; and not less than $41
the program in FY2023. The text of the law gives no
million (available until September 30, 2025) for matching
indication of why no funds are available for program
grants for the Community Volunteer Income Tax
operating costs. This lack of funding may require the IRS to
Assistance program. The law provides $271 million to the
dip into IRA BSM money to cover those and other expenses
Taxpayer Advocate Service (TAS), $7 million of which is
that normally are paid for out of annual appropriations.
to be used for cases involving identity theft and refund
fraud.
Administrative Provisions
Appropriations laws typically include provisions (also
Enforcement
known as riders) directing a federal agency to engage in or
This account covers the costs associated with collecting
eschew certain actions. P.L. 118-47 contains 12 such
taxes owed, legal and litigation support, criminal
provisions for the IRS. They address matters such as
investigations, and enforcement of tax laws.
employee training in taxpayer rights and confidentiality,
improvements in telephone service for taxpayers, targeting
P.L. 118-47 provides $5.438 billion in appropriations for
taxpayers because of their “ideological beliefs,” and
enforcement in FY2024. Of this amount, $250 million is
considering someone’s compliance with tax laws in making
available for obligation until the end of FY2025; $60.3
hiring and promotion decisions.
million is set aside for the Interagency Crime and Drug
Enforcement program; and $25 million is for the acquisition
To ensure that the IRS does not attempt to spend more on
of “investigative technology” by the IRS Criminal
enforcement than the appropriated amount, a rider bars the
Investigation Division (CID).
agency from transferring any FY2024 appropriations to the
enforcement account.
Operations Support
This account funds the operation of the IRS’s infrastructure,
Policy Issues
including research and statistics of income, headquarters
One policy issue raised by P.L. 118-47 concerns the
maintenance, information systems development and
revenue implications of the $20.2 billion rescission of IRA
operation, and telecommunications.
funds. The IRS has not announced which functions will be
affected. The IRA funds were intended in part to make
P.L. 118-47 provides $4.101 billion in appropriations for
substantial reductions in the federal tax gap, which
operations support in FY2024. Of that amount, $275
averaged $540 billion a year from 2017 to 2019, according
million is available for obligation until the end of FY2025;
to the most recent IRS estimate. A recent Congressional
$10 million is available until spent for equipment purchases
Budget Office analysis concluded that a $20 billion
and the “construction, repair, and renovation of facilities”;
reduction in IRA enforcement spending could result in a
and $1 million (available until the end of FY2026) is for
$44 billion drop in federal revenues from FY2024 to
research.
FY2034.
This funding is contingent on the IRS submitting quarterly
Another policy issue related to P.L. 118-47 is its impact on
reports to the House and Senate appropriations committees
the IRS’s strategic goals, as set forth in a plan released in
and the U.S. Comptroller General that summarize the status
April 2023. A key assumption undergirding the plan was
of the IRS’s information technology investments, focusing
that the IRA funds would be used to pay for the
on current status and plans and costs for the remainder of
transformation of the IRS to achieve those goals, and that
the fiscal year. The IRS is also directed to include in its
normal operating costs would be covered by annual
FY2025 budget request a summary of expected costs and
appropriations. So far, this assumption has not been upheld
results for its major IT systems during that year.
in practice. The IRS used $2.0 billion of IRA funds to
supplement its FY2023 appropriations and may draw on
Business Systems Modernization
another $818 million to maintain FY2023 operating levels
This account pays for BSM program expenses, such as the
in FY2024. There is some concern that the reduction in IRA
acquisition of information technology systems and related
funds through rescissions will make it more difficult for the
services. BSM funds are used only for the development,
IRS to realize its goals for improving taxpayer services,
modernization, and enhancement of the agency’s
accelerating the modernization of its IT systems, and
information technology. Funds from the operations support
lowering the federal tax gap by FY2031.
account cover the operation and maintenance costs of
implemented projects.
Gary Guenther, Analyst in Public Finance
IF12440

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Internal Revenue Service Appropriations, FY2024

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