Key Takeaways
- The IRS avoided a repeat of a funding recission enacted in the last long-term spending bill.
- The issue could arise again as Congress tries to pass budget for the future.
- The development coincides with bipartisan efforts to make administrative changes at the agency.
- Lawmakers look to tax to shore up Social Security.
- Federal excise tax revenue to decline.
The Internal Revenue Service has seen its budget slashed by Congress in recent years, but in this latest round it managed to dodge the knife.
According to news reports, a bipartisan Senate bill to fund the government through December 4 will ensure that the agency’s budget remains at its current levels—without repeating a $11.2 billion recission in funding from the 2022 Inflation Reduction Act. A House of Representatives counterpart did not include such a carveout, so the recission could have applied a second time.
While the Senate version, should it pass, will preserve the status quo. But the disconnect indicates that funding for tax administration remains a very live political issue. Current government funding runs out on Sept. 30, although Congress normally avoids a shutdown during the weeks before an election. The \stopgap measure would extend funding into the lame-duck period, when lawmakers would have more time to make a long-term deal.
While Republicans and Democrats remain at loggerheads over IRS funding—with Democrats trying to restore more money for tax enforcement and Republicans claiming it needs to be cut further—they’ve found some middle ground on issues of tax administration. Despite the controversy over President Trump’s immunity agreement against further tax audits, the Senate Finance Committee overwhelmingly passed a bipartisan bill with proposals recommended by the National Taxpayer Advocate. The House has also passed several items addressing administrative concerns.
Those issues could also be brought up again in the lame duck session—either in the context of a larger budget fight, or on their own.
Recent Tax Pieces:
Senators Look to Novel Ideas to Fix Social Security Shortfall – Macon Atkinson, Bloomberg Tax ($):
The plan essentially privatizes a portion of Social Security and allows the investment fund’s assets to bolster the trust fund’s balance. Cassidy’s office said managers who meet traditional fiduciary standards would oversee the fund.
Though efforts to privatize all or part of Social Security have been tried before, most famously by former President George W. Bush, Cassidy said “no one has a plan” to deliver promised Social Security benefits and his plan could be part of the solution.
Excise Taxes’ Share of Federal Revenue to Continue Decline – Jared Serre, Tax Notes ($):
“That decline occurs because many excise taxes are imposed as a fixed dollar amount per unit sold and because the number of units sold is projected to either grow more slowly than the overall economy or decrease in coming years,” according to the report. “Those factors also contribute to changes in the composition of excise tax revenues over the 10-year period.”
Ways and Means Democrat’s Bill Targets Trump Tariffs – Ashley R. Williams and Erin Slowery, Bloomberg Tax ($):
Rep. Don Beyer (D-Va.) introduced the Homebuilding Materials Tariff Relief Act to exempt critical products used in home construction from certain tariffs imposed since the start of President Donald Trump’s second term.
“The homebuilding sector has been particularly hard hit” by what Beyer described as “disastrous tariffs” in a statement.
Senate Panel Advances Blanche After Rescission Order on Fund – Cady Stanton, Tax Notes ($):
The Senate Judiciary Committee voted 12-10 on August 4 to advance acting Attorney General Todd Blanche to the full chamber for a vote after two Republican senators on the panel, Finance Committee members John Cornyn of Texas and Thom Tillis of North Carolina, flipped to support Blanche’s nomination after he formally rescinded the order establishing the Trump administration’s “Anti-Weaponization” Fund in an August 2 announcement.
Lawmaker Urges IRS to Fix Joint Filing Snafus – Ben Valdez, Tax Notes ($):
The IRS requires married taxpayers filing jointly to designate a primary and secondary taxpayer on the return and will use the primary taxpayer’s Social Security number and taxpayer identification number as the main point of contact.
Public Domain Supervillain of the Week
Every week, a new villain from the Golden Age of comics, who's fallen out of favor.This week's entry: The Telepathist.
Debut Year: 1943
Debut Publication: Shield-Wizard Comics #10
Arch-nemesis: The Wizard (see October 1, 2025 post)
Abilities: As the name suggests, he has strong telepathy and other mystical powers.
Evil Plan: An Axis agent, he uses his telepathy to send secret messages to Germany during World War II.
