IRS Commissioner Danny Werfel speaks into a microphone while seated at a media podium surrounded by his colleagues.
IRS Commissioner Danny Werfel seeks additional funding from Congress. How could a stronger IRS affect your tax situation?

IRS Seeks an Additional $80 Billion

IRS Commissioner Danny Werfel is asking Congress for an extra $104 billion in funding on top of the $80 billion the agency received from the Inflation Reduction Act.

Werfel argues this increase is needed to improve customer service and modernize systems. However, some lawmakers are pushing back, suggesting the agency should operate within its annual budget.

Whether the IRS receives additional funding or not, there will be major implications for Americans struggling with outstanding tax debt.

What It Means for Your Tax Debt

If the IRS Receives More Funding

If Congress approves the additional funding, the IRS could use the money to expand programs like Offer in Compromise, which allows taxpayers to settle their debt for less than the full amount owed in certain circumstances.
However, the agency may also hire additional agents and officers to ramp up enforcement actions like audits, liens, and garnishments to pursue delinquent taxpayers.

If the IRS Remains Underfunded

The upside is that enforcement personnel like revenue officers could get cut, potentially providing delinquent taxpayers more time before aggressive enforcement actions are taken against them.
The downside is that budget cuts would hamper the IRS’ ability to assist taxpayers with resolving debts and applying for relief programs. Fewer customer service staff would make it extremely difficult to get through on the phone lines or schedule appointments.

The Takeaway

Regardless of the outcome, Americans with tax debt understand that the debt won’t disappear on its own. The IRS will only continue to add penalties and interest on top of the debt.

However, the possibility of a stronger and better-funded IRS makes it increasingly critical to resolve your tax situation swiftly – before the IRS can expand enforcement operations.

If you’re ready to return to compliance and resolve your tax issues for good, now is the perfect time. The IRS recently expanded tax forgiveness programs for 2024, making it easier than ever to qualify for penalty relief.

Take our brief Tax Relief Survey to learn if you may qualify for IRS Fresh Start programs that could reduce or even eliminate your debt. Explore your options today, while the IRS remains underfunded.