Congress’ appropriations process failures continue to weigh down the IRS

Congress finally came together to give the Internal Revenue Service (IRS) the largest funding increase in decades. The IRS desperately needed this boost, and the increase will assist the IRS in delivering on its mission for the American taxpayers this filing season. But with only six months until the IRS faces another threatened shutdown, another continuing resolution, and another battle for necessary funds — it is entirely evident the broken appropriations process will continue to weigh down IRS success.

Congress passed three continuing resolutions this cycle and was five months late on FY 2022 funding. The constant inability of Congress to fund the government adequately and on time has widespread ramifications on long-term planning, mission delivery, and taxpayer services.

For more than 20 years, Congress systematically defunded the IRS, depleting its resources, and whittling down its workforce while demanding more of the agency. Now, Congress has attempted to reverse course. But this is not enough and when the IRS does not improve, Congress will once again blame the IRS rather than itself.

First, at $12.6 billion in funding for FY 2022, the IRS is still nearly $4 billion below its 2011 peak of $16.4 billion, when accounting for inflation.

Second, in six months when the annual appropriations panic resumes, Congress will again write letters criticizing the Service for a lack of long-term planning and demanding improvements to taxpayer services.

But the IRS cannot enact a long-term plan to modernize its systems when it does not know what funding it will have in six months. The IRS cannot conduct robust hiring and onboarding when it is in a continuing resolution state. Put simply, the IRS cannot do its job effectively when Congress consistently fails to do its job. And taxpayers ultimately pay the price.

Without consistent appropriations no organization can function effectively, and the IRS is no exception. It should shock Americans that, after degrading the IRS for decades, it can no longer collect approximately $1 trillion in legally due taxes each year due to congressional irresponsibility. 

An IRS gutted by Congress has resulted in a two-tiered tax system, where hard-working Americans pay all taxes they owe, but the top 1 percent continues to avoid or evade an estimated $160 billion in taxes. The working poor are twice as likely to be audited than wealthy taxpayers and the most heavily audited counties in America might have more than a third of their residents living below the poverty line.

The shortage of skilled staff and significant budget cuts to the IRS continue to hinder IT development and modernization, leaving the agency reliant on the government’s oldest continually operating computing database. A system planned by President Eisenhower and implemented at the start of the Kennedy administration; this database is currently processing its 61^st consecutive filing season. 

If Congress wants to enact long-term change for the IRS, it must provide multi-year funding dedicated to IT modernization and pass robust appropriations for the federal government on time.

Providing dedicated multi-year IT funding and passing appropriations on time would secure robust customer service improvements, reduce handling times at the IRS, and provide employees with the budgetary certainty they need to do their jobs effectively and efficiently. These are necessary steps in the direction of revitalizing an agency stripped of its capacity to serve the public.

As lawmakers call for the American economy to regain some sort of normalcy, the federal government cannot function properly without a well-functioning IRS because the agency is the single greatest revenue source for the federal government. And the American public shouldn’t have to play a relentless game of cat and mouse with a necessary federal resource to avoid liability. 

Congress must provide multi-year, dedicated IT modernization funding so the IRS has modernization funding that is insulated from the annual congressional dithering to fund the government. This is the only way the IRS can enact a stable modernization plan and focus annual appropriations on other workforce and mission priorities. President Biden has taken an important step in requesting an additional $1.5 billion bump in funding in the administration’s FY 2023 budget request — the next step is for Congress to robustly, timely, and consistently fund the IRS so the IRS can serve the American public as the Service was meant to.

Chad Hooper is executive director of the Professional Managers Association (PMA). PMA is a non-profit professional association that has, since 1981, represented professional managers, management officials, and non-bargaining unit employees at the Internal Revenue Service (IRS). PMA advocates before Congress and the executive branch on policies aimed at improving IRS operations, including securing proper funding to restore IRS capacity.