IRS funding in crosshairs as government shutdown looms


The House and Senate passed competing bills on IRS funding as lawmakers race to finish the appropriations process before a potential government shutdown on Oct. 1.


The Senate Appropriations Committee unanimously approved a bipartisan IRS funding bill would keep the IRS budget flat at 12.3 billion for fiscal 2024. The bill from the House Appropriations Committee would cut funding by $1.1 billion and was passed on a 34- 26 party-line vote. Neither bill would address the special IRS funding from the Inflation Reduction Act, though lawmakers recently agreed to reallocate $20 billion of that $80 billion to other priorities. The funding bills are part of a broader appropriations process that would fund the government after the current fiscal year expires on Sept. 30.


The process has proven contentious despite the recent agreement on the debt limit, which was meant to set spending levels for the next two years. Appropriators have been publicly optimistic about getting a deal before the Oct. 1 deadline, but progress has been slow, and a shutdown remains possible. Lawmakers will have just 18 days to finish work after returning from August recess.


Tax priorities, such as extending bonus depreciation and restoring research expensing under Section 174, appear unlikely to be attached to any spending deal in September or October. Lawmakers are increasingly discussing their prospects as being tied to a late year-end deal. The prospects for action before the September and October filing deadlines seem to be diminishing. The spending showdown could also be punted to later in the year by a continuing resolution. 



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