Cady Stanton, “IRS Funding Up in the Air Ahead of Deadline” (Tax Notes, August 31, 2026):
The levels of both mandatory and discretionary funding for the IRS face an uncertain future as Congress returns from its August recess, and the fate of the agency’s annual funding likely won’t be determined until the end of the year.
Lawmakers have a September 30 deadline for fiscal 2027 government funding when they return from the summer break, with the passage of a short-term extension of funding at fiscal 2026 levels into December serving as the most likely scenario. But language in the final version of that stopgap bill plays a role in forecasting additional cuts to the agency’s boosted operations support funding.
A stopgap funding bill passed by the Senate August 8 includes language to prevent a second $11.7 billion rescission in mandatory funding the IRS originally received in the Inflation Reduction Act — a cut that would be otherwise copy-pasted in a clean extension. A separate stopgap funding bill that passed the House July 21 doesn’t include similar language to explicitly remove a reference to the rescission for the stopgap period.
The House is expected to hold a vote on the Senate funding bill the week of August 31. But even if funding is extended through December, the status of annual funding for the IRS for the remainder of the fiscal year will remain up in the air until the end of the year, if not later.
House Republicans’ fiscal 2027 financial services and general government (FSGG) bill would set a $10.2 billion annual budget for the IRS, down from $11.2 billion for fiscal 2026. The legislation would give the agency its smallest budget since 2004 and would include $3 billion for taxpayer services, flat from last year; $3.6 billion for enforcement, a nearly 28 percent cut year over year; and $3.6 billion for technology and operations support, up nearly 14 percent.
