This fall, Congress could allow billions of dollars in IRS funding to disappear on autopilot. If your reaction to reading that, gentle Reader, is to glance up at the date of this article to double-check that you’re not accidentally reading an old piece, you’re not. Yes, that did, indeed, already happen. And, yes, it could happen again—and for the exact same reason. By agreeing to IRS rescissions in the fiscal year 2026 appropriations package enacted earlier this year, congressional Democrats have set up FY27 as a repeat of the showdown they lost in FY25. We may not know the outcome until well after the election, but there are reasons to be both optimistic and worried about how Congress will proceed.
On the optimistic side, the Stop CHEATERS Act (S. 4298/H.R.9736) introduced by Sen. Elizabeth Warren and Rep. Suzan DelBene would restore the multi-year mandatory funding rescinded from the IRA and account for recent cuts to the IRS’s base budget. This funding is crucial for helping regular taxpayers while raising desperately needed revenue from wealthy and corporate tax cheats.
On the pessimistic side is the history and current reality that leaves us vulnerable to Republicans’ aggressive attacks on the IRS. To quickly recap how we got here:
In 2023, with Republicans in control of the House of Representatives and with a 50-50 split in the Senate, then-President Joe Biden and his team ceded away $21.6 billion in long-term IRS tax enforcement funding which had been part of the 2022 Inflation Reduction Act’s (IRA) effort to crack down on wealthy tax cheats. In exchange for giving up tax enforcement money, the president’s team won an increase of $20.2 billion in short-term appropriations for domestic priorities.
The administration agreed to cut $1.4 billion immediately as part of the legislation raising the debt limit. They planned to cut $10 billion in FY24 and another $10.2 billion in FY25. But to avoid a government shutdown in January 2024, then-Senate Majority Leader Chuck Schumer capitulated to House GOP demands to roll $20.2 billion in cuts into the FY24 appropriations bill.
This proved to be a disastrous move, opening up an avenue for House Republicans to quietly outmaneuver IRS supporters in Congress. When the FY24 bill became the basis for all subsequent continuing resolutions (CRs),1 that $20.2 billion cut was replicated on autopilot, like a cell copying harmful instructions from damaged DNA. And thus Republicans were able to strike $40.4 billion—nearly all of the remaining IRA investment in tax enforcement—entirely through bipartisan appropriations, and without having to offset the high cost of repeal.
With the tax enforcement pot completely drained by the fall of 2025, appropriators turned to the IRS’s IRA-funded operations budget as their next piggybank, with Democrats agreeing to rescind $11.7 billion of operations money in exchange for a short-term increase in FY26 health and education spending. Following a protracted government shutdown centered on immigration, Congress eventually passed PL 119-75 in February to re-open most of the government through the end of FY26. Quietly tucked in the bill was language transferring IRS operations funding to the Departments of Education and Health and Human Services.2
Five months later, House Republicans rolled out their CR to fund the government through December 4 in order to avoid a pre-election shutdown. And just like last time, the House’s CR replicates the earlier rescission,3 potentially turning a one-time $11.7 billion cut to the operations budget into twice as much and wiping out whatever remains of the operations account—all on autopilot. (The original IRA authorization for IRS operations was only $25.3 billion.) The House passed its bill, then promptly recessed for the summer.
In more promising news, the Senate is on the precipice of passing its CR which includes an anomaly to delete the rescission, setting up a vote on the floor this week and (if successful), a fight with the House in September.4
The same caveats apply as did last time around: a short-term CR doesn’t officially repeal the funding, so if the House wins out, the money isn’t gone. Not yet, anyway. It would go into a kind of budgetary limbo, not legally gone but not able to be spent. But if the language is extended through the end of FY27—as the enforcement language was extended through the end of FY25—the money will be gone gone, wiping out the very last of the IRA operations funding, which had already fallen to $7 billion at the end of FY25. These cuts come on top of the deep cuts to the IRS’s base budget over the last few years.
Behind the scenes, congressional leaders and even some advocates have privately argued against protecting the IRS from cuts so long as the Trump administration remains hellbent on using government authority to punish its political opponents and reward its cronies.5
Meanwhile, the administration has argued that even with these cuts—compounded by the deep staffing cuts demanded by DOGE—the 2026 tax filing season was “largely successful,” and by implication, the lost funding was unnecessary after all.6
But my own first-hand experience with this year’s tax-filing season was anything but a success. The IRS.gov/connect system wasn’t working correctly for me. The call volume at both the customer service number and the taxpayer assistance appointment line was so high that both numbers hung up on me across multiple days and attempts. Even discounting that this is just one taxpayer’s experience, as I explained to Newsweek in July, if the call volume across multiple IRS numbers is so high that callers aren’t even put into a queue but are told to “call the next day” and then promptly hung up on, that suggests a collapse of IRS’s ability to manage operations.
One doesn’t have to dig far below the administration’s boasts about a “home run” to see how regular tax filers have been hurt by these repeated budget cuts. Even as she applauded the IRS workforce for their professionalism in overcoming the numerous challenges foisted on them by policymakers, National Taxpayer Advocate Erin M. Collins cautioned that “taxpayers who required assistance from the IRS often struggled to get it” this year and noted that the agency answered 20% fewer calls than the previous filing season, while the number of fully staffed Taxpayer Assistance Centers plummeted by more than half.7
And so we face a dilemma: the harm done to regular taxpayers caused by these budget cuts is real. The IRS cannot fulfill its obligations to our democracy—to catch rich tax cheats defrauding the public and help regular people with their legitimate tax-filing needs—without a sustained multi-year commitment from our political leaders.
But even as they have given lip service to support for the agency, too many of those leaders have repeatedly abandoned it, treating its budget like a piggybank that they can carelessly dip into at will. The IRA investment in enforcement is gone. The IRA investment in operations is waiting for the second swing of the ax.
As mentioned, the Stop CHEATERS Act (S. 4298/H.R.9736) would restore the funding taken from the IRA and backfill some of the recent cuts to IRS’s base budget.
Unfortunately, we now know how vulnerable this funding becomes without sustained public pressure to protect it. A Democratic White House and Congress already enacted a version of the Stop CHEATERS Act once and unlike the 2026 tax season, it really was a “home run” for the public. Instead of defending their lead, however, they made one disastrous error after another. Going forward, it won’t be enough just to hit it out of the park again, they’ll have to stick around and play real defense this time.
Endnotes
- 1. This was a predictable outcome as Congress has required one or more CRs each fiscal year every year since 1998. What appears to have caught Democratic appropriators by surprise, however, is that the so-called “full-year CR” was structured as a true continuing resolution and not as a de facto omnibus. In private conversations with appropriators, advocates were assured that while a full-year CR could theoretically continue the IRS rescission, “that’s not how it’s ever been done.” Advocates were skeptical that House Republicans would feel bound by precedent, but could not persuade appropriators that the risk was real.
- 2. “Sec. 528. Of the unobligated balances of amounts made available in section 10301(1)(A)(iii) of Public Law 117–169, $11,661,000,000 are hereby rescinded.”
- 3. In the confusing world of federal appropriations, the absence of new language stripping out the prior rescission (referred to as an “anomaly”) is what allows it to replicate on autopilot.
- 4. “The Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2026 (division B of Public Law 119–75), except section 528.”
- 5. That position, while understandable, suggests that some Democrats never really believed their own messaging about the IRS, which is a shame because it’s true: an underfunded IRS can still do plenty of harm to low-income tax-filers and regular people and even to well-funded adversaries. It just simply doesn’t take that many resources to target political opponents with investigations and audits, especially if the goal isn’t to win but to punish. An administration willing to prosecute private citizens for posting seashell photos and touching peeling paint is one that knows that even dismissed cases can still wreak havoc on the lives of the target. The strength of the case is often irrelevant to the harm that can be done. The victims of underfunding are the EITC recipients targeted for audits who can’t speak to a live IRS employee on the phone. That’s as true now as it ever was.
- 6. These rosy claims were called into question in a letter from 14 Democratic senators in response to reporting that IRS had scrambled to hire 8,000 additional workers after previously cutting 27% of its workforce.
- 7. The number of fully staffed TACs fell from 102 in the 2025 filing season to 42 in the 2026 season. My own experience trying to get help from a TAC in the DC metro area is that it was impossible.
