WASHINGTON (Reuters) – Cuts to the Internal Revenue Service, long sought by Republicans in Congress, would increase the agency’s deficit by $140 billion over a decade, slow operations and reduce complex audits of large corporations, Treasury Undersecretary Wally Adeyemo. Tuesday.
Adeyemo told reporters that the IRS faces a $20 billion shortfall over the next decade unless Congress acts as part of its next federal funding initiative to address the budget deficit included in the September continuing resolution.
The IRS will have to slow its pace of modernization and reduce spending while wait times will increase unless Congress fixes the budget issue, he said. And the challenges could get worse if Republicans make good on their promise to target IRS funding.
Reducing IRS funding would mean an end or a significant reduction in enforcement programs targeting wealthy individuals, large corporations or complex relationships, he said, citing two programs that have received $1.3 billion so far.
Less money for technology, artificial intelligence and machine learning will limit big-ticket enforcement efforts, while middle-class taxpayer audits may increase because they are easier to do with less technology.
US President-elect Donald Trump previously supported efforts to replace the 1960s-era IRS machinery, and the current strategy mirrors one drafted by his former IRS commissioner, Adeyemo said. But Trump vowed on the campaign trail to rescind all unused funds from the Tax Cuts Act, including billions of dollars earmarked for additional IRS approvals.
He said IRS enforcement funds will expire in fiscal year 2025, and utility development funds will expire the following year, unless the funding is reinstated.
