Omnibus spending bill gives IRS $320M to implement tax law

Greg Nash

The omnibus spending bill released Wednesday night provides the IRS with $320 million to implement the new tax law that President Trump signed in December.

The bill gives the agency a total of $11.43 billion, about $196 million more than the enacted level for fiscal 2017.

Of those funds, $320 million are provided specifically for implementing the new tax law. That money is available to the IRS until Sept. 30, 2019, but is not available to the agency until the IRS’s head submits a spending plan to the Appropriations committees.


The amount of dedicated money for tax-law implementation is less than the request from the Trump administration, which sought nearly $400 million for that purpose. The administration said most of its request for tax-law implementation funds would go to technology and hardware.

Still, the legislation reflects a willingness from Republicans to give an agency they’ve disliked in recent years funding to execute their signature legislative accomplishment in the Trump era.

The IRS had its budget cut significantly during the early part of the decade. Republicans had been critical of the agency during the Obama administration, particularly after a Treasury Department watchdog found in 2013 that the IRS had subjected conservative groups’ applications for tax-exempt status to extra scrutiny.

The omnibus includes several provisions aimed at providing oversight of the IRS that have been a part of several recent spending bills.

However, the legislation does not bar the IRS from using funds to enforce the Johnson Amendment — a law that prohibits churches and other nonprofits with 501(c)(3) tax-exempt status from endorsing political candidates.

A bill the House Appropriations Committee released last year included such a prohibition. Republicans have backed repealing the Johnson Amendment, arguing that it restricts religious institutions’ First Amendment rights. But Democrats have strongly defended the Johnson Amendment, saying that repealing it would inject more “dark money” into politics.

The omnibus spending bill includes a fix to a provision in the new tax law known as the “grain glitch,” which had the unintended effect of incentivizing farmers to sell their products to cooperatives instead of to other types of businesses. Republican tax-writers and agriculture groups pushed strongly to get a fix to the grain glitch into the omnibus.

Some Democrats were reluctant to make fixes to the new tax law sought by Republicans without getting their own desired tax changes. As a result, the spending bill also includes an expansion of the low income housing tax credit  — a program that provides tax incentives to developers who build or rehabilitate affordable housing.

The omnibus also includes technical corrections to bills passed between 2004 and 2016. But it does not include fixes to drafting errors in the new tax law that have been sought by retail groups.

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