House advances slimmer IRS budget for 2027

The House Appropriations Committee approved further budget cuts for the Internal Revenue Service, expanding the use of artificial intelligence and data analytics to handle enforcement along with a restructuring effort that aims for greater efficiencies, while rejecting Democrats’ efforts to revive the Direct File program and do more audits of the wealthy.

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The committee voted last Wednesday by a margin of 34 to 28 to approve the slimmer budget for the IRS in fiscal year 2027 of $10.2 billion, a reduction of $953 million from fiscal year 2026.

According to documents from the committee, the budget request includes funds to modernize enforcement through expanded use of AI, advanced analytics, and improved data integration. The money will also be used to expand secure online services that allow taxpayers to manage their affairs with greater ease and transparency, as well as protect taxpayer privacy and security. Other priorities include implementing a restructuring effort to deliver on Treasury Secretary Scott Bessent’s priorities, including revenue collection, critical technology modernization, and preserving privacy for taxpayers; driving efficiencies that will allow the IRS to operate within appropriated levels; and reflecting an updated strategy to planned modernization initiatives.

“These reductions are made without compromising essential services — ensuring resources are aligned with the highest priorities of Americans,” said committee chairman Tom Cole, R-Oklahoma. “The people demanded a new mandate, and we are carrying it forward. That includes reinforcing President Trump’s work to end Biden-era rules, rein in a supercharged IRS, and ensure that only citizens vote in our elections. “

The bill includes $3.6 billion for enforcement in fiscal year 2027, $1.4 billion below fiscal year 2026, $3 billion for taxpayer services, the same as fiscal year 2026; and $3.6 billion for technology and operations support, or $446 million above fiscal year 2026.

Rep. Steny Hower, D-Maryland, criticized “the draconian cuts to the IRS with an 8.5% reduction overall and a 28% cut to enforcement.”

The bill also provides $2 billion in funding for the Securities and Exchange Commission in fiscal year 2027, a 5.7% cut from fiscal year 2026. It includes a prohibition on implementing the climate disclosure rule that former SEC chair Gary Gensler had pushed to finalize before the SEC shelved it amid a wave of industry lawsuits. However, the funding for both the SEC and the IRS is larger than what the Trump administration had requested.