IRS Faces Steeper Funding Cuts for FY 2026, Critics Warn of Service Delays
Steeper funding cuts may be on the way for the Internal Revenue Service (IRS).
The House Appropriations Committee voted to advance the Financial Services and General Government (FSGG) funding bill for fiscal year (FY) 2026 by a vote of 35-28.
The bill includes $9.5 billion in funding for the IRS, a 23 percent cut amounting to $2.9 billion less than current level. The cut is deeper than the White House proposed, which called for more resources.
House Republicans also rejected an administration request to approve $850 million to help the IRS hire an additional 11,000 call center representatives, and to roll out new automation tools to help taxpayers. Without the extra employees the IRS says it will only be able to answer about 16 percent of calls during next year’s tax filing season.
The bill also cuts tax enforcement funding by 45 percent, zeros out funding for IRS business systems modernization, and ends the free online tax filing program Direct File unless it’s approved by Congress.
"The advancement of this bill is a sign that we are one step closer to fiscal discipline and common sense within our own federal government,” said FSGG subcommittee chairman Rep. Dave Joyce (R-OH).
But Democrats warn the legislation will “gut the IRS.”
“Hardworking Americans who do this will pay their taxes each year will have to pick up the tab for the hundreds of billions of dollars in lost revenue from this bill over the years. Those same folks will also have a harder time filing their taxes because of this legislation's cuts to IRS customer service,” said FSGG subcommittee ranking member Rep. Steny Hoyer (D-MD).
The IRS has already lost about a quarter of its workforce, and National Taxpayer Advocate Erin Collins is also warning that taxpayers may face delays next tax season.
That position was echoed by the Professional Managers Association (PMA), which warned not only of taxpayer delays, but also of declining morale in the agency due to job cuts and other factors.
“Key policy decisions have contributed to the departure of experienced leaders, the marginalization of institutional knowledge, and a broader erosion of confidence across the agency. These conditions have produced one of the most challenging leadership and morale climates in the IRS’s modern history,” wrote Professional Managers Association Executive Director Kelly Reyes.
Taxpayer Assistance Centers Closing
The IRS also announced that it’s closing nine in-person Taxpayer Assistance Centers (TAC) in six states: two in Pennsylvania, two in New York, two in Kentucky, and one in Iowa, California, and West Virginia.
The move was criticized by federal labor groups and lawmakers whose districts will lose the TAC sites.
“Taxpayer Assistance Centers are absolutely essential to the nation’s tax system and closing them is the opposite of what the IRS should be doing right now,” said National Treasury Employees Union (NTEU) National President Doreen Greenwald. “We urge the IRS and the Treasury Department to reconsider these closures.”
“Closing this office without providing a suitable replacement will impose an undue burden on my constituents, many of whom rely on in-person services to resolve complex tax issues,” New York Representative Mike Lawler wrote in a letter to Treasury Secretary and Acting IRS Commissioner Scott Bessent dated Sept. 4.
