The Internal Revenue Service Advisory Council said the agency needs to work to educate lawmakers to prevent them from shutting off future funding after last year’s infusion from the Inflation Reduction Act.
In its annual report for 2023, IRSAC said that in the wake of the IRA, Congress did not appropriate any FY23 funding to the IRS for business systems modernization and appropriations for taxpayer services, and that operations support remained flat despite record increases in inflation.
“Further, lawmakers clawed back some of the IRA funding through the Fiscal Responsibility Act of 2023 and continue to propose bills that seek to reduce annual IRS appropriations and reduce the 10-year additional funding provided by IRA,” the report reads.
Citing improvements last filing season and a potential “misperception that the IRS has, due to the IRA funding, enough money to maintain daily operations, continue advancing in progress improvements, and complete the overhaul envisioned by the IRA … reduced annual appropriations, IRA clawbacks, and inflation hamper these efforts,” the report adds.
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“The IRSAC recommends that the commissioner and IRS leaders formulate a brief but impactful analysis (for discussion with lawmakers) that articulates the benefits of increasing annual appropriations to the taxpayer services account and restoring annual funding to the business systems modernization account. The information should also include that the IRS had to supplement annual appropriations with IRA funding to offset inflationary increases that were not included in any of the four categories for FY 2023 appropriations,” the report adds.
The report also includes recommendations on 23 issues covering a broad range of topics including:
- The Sec. 302 escrow and certification procedure;
- Timely obtaining EINs to comply with Corporate Transparency Act requirements;
- 1099-K reporting;
- Self-correction guidance for employee plans; and,
- Forms modernization.
IRSAC is a federal advisory committee to the IRS commissioner that provides a public forum for discussion of tax administration issues between IRS officials and representatives of the public.
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