IRS may lose $20 billion in funding without congressional action, Treasury officials warn

Treasury Department officials warn that the IRS may lose $20 billion in funding if Congress does not intervene.

Last year, $20 billion was rescinded from the IRS, but the budget cut could be inadvertently duplicated due to a legislative mechanism that keeps the government afloat, the Associated Press reported.

Treasury Deputy Secretary Wally Adeyemo said Tuesday that the national deficit would increase by $140 billion if another $20 billion is taken from the IRS budget. He also said the agency would have to go on a hiring freeze and there would be 2,000 fewer audits of large corporations, as well as 6,000 fewer audits of wealthy individuals.

“The IRS is going to potentially have to make dramatic decisions about stopping hiring and starting to budget for a world which they don’t have $20 billion which will stop a lot of their progress,” he said. ”If they don’t get that $20 billion that is at risk they would run out of enforcement money at the current pace sometime in fiscal year 2025.”

Adeyemo also said Congress would have to reach a comprehensive spending deal for the remainder of fiscal 2025 or include additional language in another continuing resolution to avoid another $20 billion being cut for the IRS, according to FederalNewsNetwork.com

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, also warned of the effects of overall spending cuts to the IRS.

“Given the fiscal situation we deeply hope there is no backsliding in the coming months and years with rescinding, diverting, repealing any of the revenue that is going effectively into the IRS to help with tax collection,” MacGuineas said.