GOP may increase IRS’s budget

Republicans are weighing whether to increase the IRS’s funding so that the agency has more money to implement the new tax-cut law.

GOP lawmakers were highly critical of the agency during the Obama administration, but now want to make sure that their signature legislative achievement is carried out effectively.

Treasury Secretary Steven Mnuchin said Friday that the administration is talking to Congress about providing the IRS with more money for implementation purposes. And GOP lawmakers have expressed an openness to a funding increase.

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But a budget increase isn’t a done deal, with Republican lawmakers also wondering if the IRS could better use the resources it already has.

“I think we’ll probably take a look into that, but I don’t know that they’re going to need more funding,” said Rep. Mike Kelly (R-Pa.), a member of the tax-writing House Ways and Means Committee.

The IRS saw its budget slashed in the early part of the decade, forcing the agency to shrink its staff by thousands. It saw a slight increase in funding in fiscal 2016 and had its funding level kept flat in fiscal 2017, but its overall budget is still less than it was in 2008.

The IRS preliminarily estimated it will need an additional $495 million for fiscal 2018 and 2019 to implement the new law, according to a report released Wednesday by National Taxpayer Advocate Nina Olson. This money would be needed to update forms, answer taxpayer calls and issue new guidance.

While Olson said there is work the IRS can do to improve taxpayer service that doesn’t require more funds, she also said there is “no doubt” that the agency needs a funding increase.

The Trump administration’s budget proposal last year cut the IRS’s budget for fiscal 2018 by $239 million. But Mnuchin is now discussing more funds with lawmakers, and says he thinks the agency will make new hires to carry out the law.

“We would expect that we would hire a significant number of people to help with the implementation,” he said Friday at an event hosted by the Economic Club of Washington.

On Capitol Hill, Republicans have made the IRS one of the top targets for their anger in recent years — particularly after a 2013 inspector general report found that the agency had subjected conservative groups’ applications for tax-exempt status to extra scrutiny and delays.

Members of the hard-line House Freedom Caucus pushed for former IRS Commissioner John Koskinen to be impeached, accusing him of impeding congressional investigations into the targeting scandal. Besides the complaints about the scrutiny of conservative groups, Republicans have also blasted the IRS over taxpayer service and cybersecurity issues.

But Koskinen’s term ended in November, and Republicans feel like they can work with acting Commissioner David Kautter, who is also Trump’s assistant secretary for tax policy at the Treasury Department.

It’s also to Republicans’ benefit to see the new tax law implemented with as few hiccups as possible. The measure was one of the GOP’s top priorities and passed without any votes from Democrats.

Mark Everson, a former IRS commissioner under President George W. Bush, said that Republicans won’t want a rerun of Democrats’ botched rollout of ObamaCare — which made an already controversial law look worse.

“If the IRS is unable to implement the new law effectively because of a lack of resources, the Congress will look bad,” said Everson, who now serves as vice chairman of alliantgroup.

Funding levels for the remainder of fiscal 2018, which started Oct. 1, will be determined when Congress passes an omnibus appropriations bill. It’s not clear yet when such a bill will be released, since Democrats and Republicans first need to reach an agreement about increasing budget caps.

Congressional Republicans have expressed an openness to boost IRS funding in an effort to ensure that their new law achieves the goal of boosting Americans’ take-home pay.

“I’ll work with the Trump administration to make sure they have what’s needed to fully implement the new law, which, as a first priority, returns more money to hard-working Americans in their paychecks,” Rep. Tom Graves (R-Ga.), chairman of the House Appropriations subcommittee with jurisdiction over IRS funding, said in a statement.

Ways and Means Committee Chairman Kevin Brady (R-Texas) said it’s correct for lawmakers to be willing to increase funding.

“Now, we have a new tax code, a new acting commissioner,” he told reporters Thursday.

But Brady also reiterated that he thinks that the IRS shouldn’t get more money as a default position.

“It’s not automatic. It needs to be proven,” he said, adding that the IRS also has to identify what existing resources can be used more effectively.

A spokesperson for Sen. Shelley Moore Capito (R-W.Va.), the chairwoman of the relevant Senate Appropriations subcommittee, said in a statement that the senator’s focus “will be on how the IRS is using the resources they have and determining whether they have the capabilities to implement the law in a way that protects taxpayers.”

Rep. Jim Renacci (R-Ohio), a Ways and Means Committee member who announced this week that he’s running for Senate, said that the IRS would have more funds to implement the tax law if Congress is able to repeal ObamaCare, also known as the Affordable Care Act.

“We know that the IRS has shifted a lot of money toward the Affordable Care Act, so hopefully we can move forward on that and there will be more resources for the IRS,” he said.

But the chances of ObamaCare repeal this year are slim, given that the Senate was unable to pass legislation doing so last year and the GOP majority in the chamber is now smaller.