Late Sunday night Congress reached a budget deal that will keep the Federal government funded through the end of the fiscal year in September. The House and Senate are expected to vote on the package today or tomorrow (the House vote is scheduled for this afternoon) to ready it for President Trump’s signature before the end of the day on Friday to avert a government shutdown. The bill totals 1,600 pages (you can read the whole thing here.)

Here is a summary of the tax-related items:

  • The bill allocates a total amount of $11.2 billion to the IRS to fund various activities and operations. This includes specific allocations of:
    • $2.2 billion to fund expenses related to taxpayer services (such as funding for the taxpayer advocacy service, pre-filing assistance and account services), with $8.9 million specifically allocated to tax counseling for the elderly, $12 million for low-income taxpayer clinic grants, $15 million for a community volunteer income tax assistance matching grant program and $206 million for the taxpayer advocate service;
    • $4.9 billion for enforcement, including collection, legal and litigation support and funding for criminal investigations and enforcement, $60 million of which must be used for the Interagency Crime and Drug Enforcement program;
    • $3.6 billion for operations, including $10 million for acquisition and maintenance of equipment and facilities renovations and $1 million for research;
    • $290 million to modernize the IRS’s business systems, including IT systems and finance management systems;
    • Additional $290 million for improvements to customer service, identification and prevention of fraud and identity theft and enhancement of cybersecurity.
  • The bill contains a few provisions specifically reacting to the 2013 controversy over the IRS’s scrutiny of certain conservative political groups applying for tax-exempt status. This includes provisions that:
    • Prohibit the IRS from using funds to target groups for regulatory scrutiny based on ideological beliefs;
    • Prohibit the IRS from using funds to target citizens for exercising first amendment rights;
    • Require the IRS to apply the Section 501(c)(4) standards and definitions in effect on January 1, 2010;
    • Prohibit the use of any funds to issue, revise or finalize any regulation, revenue ruling or other guidance (other than taxpayer-specific guidance) relating the to the standard which is used to determine whether an organization is operated exclusively for the promotion of social welfare for purposes of Section 501(c)(4) of the Code during the 2017 fiscal year;
    • Prohibit the Executive Office of the President from using any funds to request a determination with respect to the tax-exempt status of an organization under Section 501(c) of the Code.
  • The bill also contains a handful of additional restrictions on the use of funds and general tax policy mandates. For example, the bill:
    • Instructs the IRS to institute and enforce policies and procedures to safeguard the confidentiality of taxpayer information and protect taxpayers against identity theft;
    • Instructs the IRS to maintain employee training programs, including training on taxpayers’ rights, courteousness, cross-cultural relations, ethics and impartial application of tax law;
    • Orders the Commissioner to prioritize improving the 1-800 help line service for taxpayers;
    • Prohibits the IRS from making videos without prior approval;
    • Prohibits the IRS from paying bonuses or re-hiring a former employee unless the process takes into account the conduct and federal tax compliance of such employee or former employee;
    • Prohibits the Secretary of the Treasury from providing any person a proposed final return or statement for use by a taxpayer.
  • The bill also prohibits any government agency from making grants or loans to, or contracting with, any corporation that hasn’t timely paid its taxes (once all available judicial and administrative remedies have been exhausted).
  • The bill allocates an additional $26 million to the CDFI Fund for use in the New Market Tax Credit program.
  • Lastly, there were rumors last week that some members of Congress (including Senator Wyden (D-OR), top Democrat on the Finance Committee) were pushing for the bill to include a permanent extension of the temporary green energy tax credits in Section 45 of the Code. No success for green energy in this round.