Bill Overview
Title: IRS Reduction Act
Description: This bill rescinds all unobligated amounts appropriated by the Inflation Reduction Act of 2022 for the improvement of the Internal Revenue Service (IRS). The Department of the Treasury must report on how the IRS plans to improve the efficiency of its services, including the processing of tax returns.
Sponsors: Rep. Van Drew, Jefferson [R-NJ-2]
Target Audience
Population: US Taxpayers
Estimated Size: 250000000
- The IRS interacts with all US taxpayers, as it is responsible for collecting taxes, processing tax returns, and enforcing tax laws.
- The Inflation Reduction Act of 2022 allocated funds to improve the IRS, which would have indirectly impacted every taxpayer by potentially improving the efficiency and effectiveness of IRS operations.
- Rescinding these funds may affect IRS operations, including tax return processing and customer service, which could delay refunds and impede taxpayer support services.
- A more efficient IRS could prevent audit mistakes, reduce wait times, and better support taxpayers; thus, changes to funding may impact all taxpayers, particularly those needing assistance with complex returns.
- There are approximately 250 million tax returns filed annually in the US, impacting individuals, families, and businesses.
- Globally, while only US taxpayers are directly impacted by IRS operations, international businesses and individuals with financial ties to the US might experience indirect effects.
Reasoning
- The IRS Reduction Act primarily affects the IRS's budget, impacting tax return processing and taxpayer service capabilities.
- IRS funding cuts may lead to longer processing times for tax returns, potentially delaying refunds and affecting taxpayer satisfaction.
- Not all taxpayers will be affected uniformly; those who require more IRS interaction, like small business owners or individuals with complex returns, may face greater challenges.
- Generally, high-income earners or those with significant deductions and complex returns are more engaged with IRS services.
- The policy may disproportionately affect certain socioeconomic groups, especially those who rely on timely tax refunds as a financial planning mechanism.
- The limited budget means there will be constraints on the scope of IRS operations improvement.
Simulated Interviews
Small Business Owner (New York City, NY)
Age: 34 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- If the IRS funding is reduced, I'm concerned that it will affect how quickly they process our business tax returns and refunds.
- I often need clarification on tax regulations, so longer wait times for help would be problematic.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 6 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 7 | 8 |
Engineer (Houston, TX)
Age: 45 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 3.0 years
Commonness: 8/20
Statement of Opinion:
- I don't usually have to interact much with the IRS, so I don't think the changes will affect me directly.
- As long as my taxes are processed on time, I am satisfied.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Freelance Graphic Designer (San Francisco, CA)
Age: 29 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- I'm worried that with less funding, the IRS might take longer to answer questions I have.
- I really rely on timely refunds to help with cash flow.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 9 |
Corporate Lawyer (Seattle, WA)
Age: 52 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 2.0 years
Commonness: 3/20
Statement of Opinion:
- I suspect the IRS cuts might cause some delays, but my advisor usually handles most communications with the IRS for me.
- I'm at ease as long as the corporate interactions aren't severely affected.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 9 |
| Year 2 | 8 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Retired (Miami, FL)
Age: 60 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 4.0 years
Commonness: 5/20
Statement of Opinion:
- I am concerned about my refund being delayed since I rely on it for a few personal projects.
- I hope the cutbacks don’t affect those of us who just need basic service. That’s all.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 8 |
IT Specialist (Chicago, IL)
Age: 31 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 1.0 years
Commonness: 10/20
Statement of Opinion:
- I rarely deal with the IRS directly because I use online services, so I don't anticipate many changes.
- Efficiency is always good, but if it gets worse, it might just mean some extra hassle.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 9 | 9 |
Public High School Teacher (Phoenix, AZ)
Age: 37 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 4.0 years
Commonness: 5/20
Statement of Opinion:
- If the funding cut leads to slower service, we might need to plan our finances more around delays.
- Help should remain accessible, especially for educators and others who rely on deductions.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 8 | 8 |
Nonprofit Worker (Denver, CO)
Age: 28 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- I count on my tax return to manage some of my expenses. If the IRS is slower, it could strain my budget.
- As someone who doesn't make a lot but still pays taxes, fairness in processing matters to me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
University Professor (Boston, MA)
Age: 50 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 3.0 years
Commonness: 3/20
Statement of Opinion:
- I'm concerned that funding cuts might slow down service related to educational credits that we rely upon.
- The IRS should still efficiently manage tax returns regardless of funding changes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 9 | 9 |
College Student (Atlanta, GA)
Age: 22 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 2.0 years
Commonness: 9/20
Statement of Opinion:
- I hope it won't take longer to get my refund, because I rely on that for some savings.
- Since I'm new to this, I just want the IRS to be as smooth as possible.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 9 | 9 |
Cost Estimates
Year 1: $300000000 (Low: $200000000, High: $500000000)
Year 2: $200000000 (Low: $150000000, High: $400000000)
Year 3: $100000000 (Low: $50000000, High: $200000000)
Year 5: $50000000 (Low: $30000000, High: $100000000)
Year 10: $10000000 (Low: $5000000, High: $50000000)
Year 100: $1000000 (Low: $1000000, High: $5000000)
Key Considerations
- Rescinding IRS improvement funds could lead to inefficiencies, affecting processing times for returns and inquiries.
- Potential tax revenue loss from reduced enforcement could partially offset fiscal savings from the rescission.
- The bill might necessitate more robust short-term financial management by the IRS to mitigate service shortfalls.