Biden May Return Part of IRS Signature Increase for Debt Limit Deal: Report

The White House is trying to negotiate part of a historic increase in IRS funding it won last year as part of President Joe Biden’s Inflation Reduction Act, in order to seal a deal to raise the debt limit and avoid a default. unprecedented by the government.

The New York Times reported Thursday that the White House was offering to redirect $10 billion of the $80 billion increase in IRS funding to ease Republicans’ proposed cuts in annual spending going to unrelated federal agencies and programs. to the defense.

The emerging deal has not yet been finalized and negotiators continue to wrangle over the details, the Times said.

With the Treasury Department saying the government may be unable to pay all its bills by early June, possibly as early as June 1, without an increase in the debt limit, it’s crunch time for House and House Republican negotiators. White House. They still face the logistical hurdles of drafting a bill and overcoming numerous parliamentary hurdles to win June 1, even if they reach an agreement soon.

Biden praised the IRS increase, noting that the nonpartisan Congressional Budget Office said it would raise about $203 billion over 10 years through improved tax enforcement efforts and could allow the agency to upgrade its frayed customer service.

Republicans made reversing the beefed-up IRS a priority when they passed their $4.8 trillion debt cap bill in late April, saying reversing it would save Americans from paying for tens of thousands of new tax agents. IRS.

Leveraging IRS money could ease the effect of spending cuts proposed by Republicans as a price for raising the debt ceiling. A central point of contention between the two sides has been the GOP position that next year’s per diem funding for agencies and programs will be less than this year, and the Democrats’ public position that only a freeze on current spending levels it was possible.

Cutting some of the IRS money could give heartburn to some House Democrats whose votes would be needed for a final deal on the debt limit.

“That’s an unnecessary concession,” Representative Richard Neal (D-Mass.) told reporters Thursday when asked about the idea, adding that it would undermine efforts to give the IRS a “more sophisticated approach” to tax collection. taxes.

“I don’t think we should concede that,” he said.

“I don’t think we should admit that.”

– Rep. Richard Neal (D-Mass.)

Likewise, Senator Elizabeth Warren (D-Mass.) tweeted her distaste for the idea.

“Cut off IRS funding to track hidden money from wealthy tax fraudsters – funding that will raise up to $1 trillion. Bad idea,” she said on Twitter.

IRS money has already made a difference in the functioning of the agency. The Inspector General of the Tax Administration reported that the IRS had reduced delays enough to be close to pre-pandemic timeliness targets. And despite receiving nearly 800,000 toll-free calls for assistance, the average IRS helpline hold time dropped from 24 minutes to just five during the spring tax filing season.

The money was also seen as a source of funding to implement a direct electronic filing program for taxpayers that would allow them to bypass the portals offered by commercial tax preparation companies such as H&R Block and Intuit.

House members left Washington on Thursday to head home for the long Memorial Day weekend, with the caution that they must be ready to return a day early once a debt deal is struck.

A weary-voiced Speaker of the House, Kevin McCarthy (R-California), said early Thursday night that efforts continued to reach an agreement and that he looked forward to working outside the Capitol over the weekend, if necessary, to reach one.

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