IRS faces funding freeze amid Congress budget disputes

The Internal Revenue Service’s (IRS) enhanced enforcement fund, originally expected to last a decade, may run out by 2025 due to budget cuts and legislative hurdles.

Initially intended to last a decade, the $80 billion funding package passed by Democrats in 2022 has been significantly reduced. 

Republicans have clawed back $21.4 billion since taking control of the House, leaving just $22.4 billion for enforcement, with $20 billion currently frozen under federal spending rules.

Deputy Treasury Secretary Wally Adeyemo warned Congress that it must unfreeze the funds in its next spending bill to avoid severe operational impacts. 

Without action, the IRS may halt hiring and conduct fewer audits—2,000 fewer on large corporations and 6,000 fewer on high-income individuals over five years.

The funding dispute is a key issue in year-end budget talks, with Republicans pushing for deeper cuts.