IRS Faces $20 Billion Funding Freeze, Threatening Enforcement Efforts

Legislative language in a stopgap funding bill has stalled IRS enforcement funds, potentially increasing the deficit by $140 billion and reducing audits of wealthy individuals and corporations.

The IRS is grappling with a $20 billion funding freeze due to language in a stopgap funding bill passed in September, which inadvertently repeated a prior enforcement cut.
Treasury officials warn that without intervention, the IRS will run out of enforcement funds by fiscal year 2025, forcing hiring freezes and limiting modernization efforts.
The funding shortfall could result in 6,000 fewer audits of wealthy individuals and 2,000 fewer audits of large corporations, reducing tax revenue and increasing the deficit by $140 billion over a decade.
The $20 billion freeze follows earlier cuts, including a $1.4 billion rescission and a redirection of $20 billion in IRS funds to other programs under a 2023 budget agreement between Republicans and the Biden administration.
The Biden administration is urging Congress to address the issue in upcoming budget negotiations, while the incoming Trump administration and Republican-controlled Congress are expected to push for further IRS funding reductions.