WASHINGTON (Reuters) – Internal Revenue Service funding cuts, long considered by Republicans in Congress, would increase the federal deficit by $140 billion over a decade, slow the service and reduce complex audits of large companies, said Treasury Undersecretary Wally Adeyemo. Tuesday.
Adeyemo told reporters that the IRS would face a $20 billion drop in funding over the next decade unless Congress acted as part of its next government funding measure to address a budget anomaly included in the September continuing resolution.
The IRS would have to slow its modernization drive and reduce enforcement, while call wait times would increase unless Congress fixed the budget problem, he said. And the challenges would get worse if Republicans followed through on their promise to target IRS funding.
Cutting IRS funding would mean the end or a major slowdown of law enforcement efforts targeting wealthy individuals, large corporations or complex partnerships, he said, citing two initiatives that have recovered $1.3 billion so far.
Less funding for technology, artificial intelligence and machine learning would limit costly law enforcement efforts, while audits of middle-class taxpayers would likely increase because they were easier to conduct with less technology.
US President-elect Donald Trump previously backed efforts to replace 1960s-era IRS equipment, and the current strategic plan largely mirrors one drafted by his former IRS commissioner, Adeyemo said. But Trump promised during this campaign to rescind all unspent Inflation Reduction Act funds, including billions of dollars earmarked for increased enforcement by the IRS.
He said IRS enforcement funds would run out sometime in fiscal year 2025, and funds to improve services would run out the following year unless funding was restored.