House Ways and Means Republicans at a joint subcommittee hearing Thursday said they couldn’t support removing a big chunk of the IRS budget from the annual appropriations process in part because of the leak of a massive trove of personal tax return information earlier this week.
President Joe Biden wants to boost the IRS budget by $80 billion over 10 years, mostly through mandatory funding that would flow automatically, to provide a sustainable budget that would allow the agency to step up its enforcement activities. The president is also asking Congress to enact a sweeping new law requiring financial institutions to report gross inflows and outflows on all business and personal accounts above $600 to the IRS.
Treasury estimates that combined these proposals would narrow the tax gap of revenues owed but not paid and raise roughly $700 billion over 10 years.
Adrian Smith, ranking member of the Select Revenues Subcommittee, said he’s concerned about establishing a mandatory funding stream for the IRS. The Nebraska Republican said he’d be glad to work with appropriators to give the IRS more long-term certainty but that can be done through regular appropriations “to ensure we continue to have proper oversight of the agency when issues arise.”
Several Republicans cited the leak of more than 15 years' worth of wealthy individuals’ tax returns to ProPublica as even more reason Congress needs to be careful not to cede any oversight authority over the IRS’s funding.
“It seems to me that is just patently, egregiously bad,” Tom Rice, R-S.C., said.
Mark Mazur, Treasury’s deputy assistant secretary for tax policy, said the key issue is that the IRS needs multiyear funding in order to make the long-term moves needed to increase tax enforcement.
The Ways and Means Committee would still have oversight over the IRS “regardless of the source of funding,” he said. “And you’d expect the IRS to have routine reports on how they’re doing on this as a way to help improve oversight as well.”
Smith also took a subtle swipe at Democrats for increasing the agency’s responsibilities with their economic policies. “We should also keep in mind anytime we ask the IRS to devote resources to mailing monthly checks or providing insurance subsidies, those are resources that can’t go to enforcement or customer service,” he said.
‘Traitors to our country’