Republicans preview push to block forthcoming IRS funding

Republicans have threatened to upend the infusion of cash allocated to the Internal Revenue Service by the Inflation Reduction Act since virtually the moment President Biden signed it into law. 

Now, with the party set to regain more power and legislative influence, lawmakers are offering insights into how they will attempt to realize that vision. 

Current House Minority Leader Kevin McCarthy, R-Calif., who is likely to become speaker in the 118th Congress, has said Republicans will revoke the IRS’ $80 billion over 10 years the IRA provided as the new majority’s first act. Even if McCarthy is able to wrangle the votes for that measure, it will be a non-starter in the Democratic-controlled Senate. Republicans are signaling another approach they could take, which would ramp up oversight of the spending. 

Lawmakers in both chambers have put forward legislation previewing how that effort could take shape, introducing a lame-duck bill that would place certain conditions on the agency’s ability to actually spend its unprecedented injection of funds. The IRS Funding Accountability Act (S. 5100) would require IRS to provide an annual plan on how it would spend the IRA money, allowing Congress to void it with a simple majority vote in both chambers. Congress would have 60 days to review the initial plan, which would require details on the spending plan over one, five and 10 years. The Government Accountability Office, Office of Management and Budget, National Taxpayer Advocate and IRS Advisory Council would all have to review the plan prior to its submission. IRS would lose $10 million in IRA funding for every day its submission to Congress was late. 

Sen. John Thune, R-S.D., the number two Republican in Senate leadership and ranking member of the Finance Committee’s panel on Taxation and IRS Oversight, introduced the bill with more than a dozen cosponsors. They said the measure would protect against misuse of funds and “guard against violations of taxpayer rights.” 

“The Democrats’ attempt to supersize the IRS without holding the agency accountable to Congress and American taxpayers is dangerous and irresponsible,” Thune said. “If our bill becomes law, the Biden administration’s IRS would have to answer to the American people, not Washington bureaucrats.”

Rep. Mike Kelly, R-Pa., introduced companion legislation in the House. 

Republicans have called the proposal a "power grab" and said the IRS is "coming for you," citing a Treasury Department document that said the agency could hire up to 87,000 employees with the funding. Sen. Rick Scott, R-Fla., even wrote a letter to Americans imploring them not to apply for the forthcoming jobs.The agency plans to backfill many vacancies and replace tens of thousands of employees who are expected to retire in the coming years, however, so the net gain of IRS agents will be a much smaller figure. It will also face some significant headwinds as it attempts to actually recruit applicants and bring them on board.  

The IRS Funding Accountability Act would require quarterly reports that include updates on the agency’s hiring in each division. The measure would likely face an uphill battle in the Democratic Senate, where it would require 60 votes for passage. 

President Biden earlier this month nominated Danny Werfel to serve as IRS commissioner. Republicans will likely press Werfel on his plans for spending the IRA money during the confirmation process and attempt to hold up his nomination, but he will have enough votes so long as the Democratic majority stays united. 

The final path down which Republicans might march in its attempt to block the funding could be the appropriations process. Already, lawmakers are pushing for extreme measures to reach their goals. 

“I think we oughta fight an epic, knock-down, drag-out fight over stopping the Democrats from funding 87,000 new IRS agents,” Sen. Ted Cruz, R-Texas, said last week on his podcast, as first flagged by Politico. “To do that, we will have to draw a line in the sand and say, ‘We will not fund them’…The only way to do it is on a government funding bill.”

Cruz explained that Republicans will take blame for causing a government shutdown, but the party should not act "like jellyfish." 

“We need to stand up and fight,” Cruz said. 

On the House side, Rep. Marjorie Taylor Greene, R-Ga., said earlier this month Republicans must hold up efforts to raise the debt ceiling and pass funding bills to “get spending back under control.” 

"And if that means a government shutdown, then I'll be calling for a government shutdown," she said.

Rep. Kay Granger, R-Texas, currently the ranking member of the House Appropriations Committee and set to become is chairwoman next year, stopped short of threatening a shutdown but told Government Executive she plans to put up a fight. 

“I opposed the billions of dollars given to agencies across the federal government in the Inflation Reduction Act,” Granger said. “I support Kevin McCarthy’s plan to vote to repeal funding for the 87,000 new IRS agents funded by that Act. As leader of the Appropriations Committee, I will work with my colleagues to reduce wasteful spending like we saw in the Inflation Reduction Act.”

The current continuing resolution funding agencies is set to expire Dec. 16. Lawmakers in both parties have expressed an interest in passing full-year appropriations for fiscal 2023 during the lame-duck session, but negotiators have yet to unveil an agreement on top-line funding.