The Israel Security Supplemental Appropriations Act would rescind unobligated funding the Inflation Reduction Act
provided the IRS for enforcement and operations support. It would also claw back funding for the agency's task force to design an IRS-run free electronic tax return filing system.The Republican proposal would also rescind Inflation Reduction Act funding for the Treasury Inspector General for Tax Administration, the U.S. Department of the Treasury's Office of Tax Policy, the U.S. Tax Court, and Treasury departmental offices.
The IRS has already seen $21.4 billion of the Inflation Reduction Act's original $80 billion funding boost clawed back under the Fiscal Responsibility Act
.House lawmakers will likely vote on the proposal this week. Newly appointed House Speaker Mike Johnson, R-La., said in an interview on Fox News that he's hopeful that the bill will get Democrats' votes, but he acknowledged that the clawbacks could deter Democratic supporters. He said he plans to speak to Senate Majority Leader Chuck Schumer, D-N.Y., about the proposal.
"I understand their priority is to bulk up the IRS," Johnson said. "But I think if you put this to the American people and they weigh the two needs, I think they're going to say standing with Israel and protecting the innocent over there is in our national interest and is a more immediate need than IRS agents."
Democrats have already condemned the proposed funding cuts. House Ways and Means Committee ranking member Richard Neal, D-Mass., said in a statement that the proposed cuts to IRS funding would come after the IRS recovered more than $100 million in unpaid taxes from wealthy taxpayers in recent enforcement efforts.
"Yet in the chaotic world of my Republican colleagues, they view this funding as a never-ending well to promulgate their whims of 'fiscal responsibility,' protect billionaires and wealthy corporations, and, ultimately, cost taxpayers more," Neal said. "Once again leaving the world wondering if they even care about sending aid to one of our greatest allies or only scoring political points."
The proposal is likely to meet resistance in the Senate, where Democrats have the majority.
Senate Finance Committee Chairman Ron Wyden, D-Ore., said in a statement that making aid to Israel and Ukraine dependent on gutting the IRS' enforcement funding would be a nonstarter, adding that the Congressional Budget Office has said that cutting that funding would actually increase the deficit.
"Hamas depends on sham charities and other illicit finance schemes to fund its operations, but this proposal would cut resources to IRS criminal investigators who are actively helping American allies stop terrorist financing and sanctions evaders," Wyden said.
The Republican proposal is also dead on arrival in the White House, press secretary Karine Jean-Pierre said in a statement.
"Threatening to undermine American national security unless House Republicans can help the wealthy and big corporations cheat on their taxes — which would increase the deficit — is the definition of backwards," Jean-Pierre said.
The U.S. Department of the Treasury said late Tuesday that the Republican proposal, if passed, would undermine the progress the IRS has already made with Inflation Reduction Act funding.
"Thanks to the Inflation Reduction Act, the IRS has already recovered $160 million from 275 individuals who make more than $1 million a year and have $250,000 in recognized tax debt, without increasing audits on those earning less than $400,000 a year," Treasury spokesperson Ashley Schapitl said. "This legislation would put a stop to these efforts, allowing wealthy individuals and large corporations to continue to get away with not paying their fair share."
--Editing by Khalid Adad.
Update: This article has been updated with comment from Schapitl.
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