The IRS is set to receive an infusion of $1.8 billion from the American Rescue Plan Act of 2021 to help it distribute the latest round of economic impact payments (EIPs) and new advance child tax credits.
“The IRS is a key player in the American Rescue Plan,” National Treasury Employees Union President Tony Reardon said in a March 10 statement following House passage of the bill (H.R. 1319), which now awaits President Biden’s expected signature.
The extra $1.8 billion — about one-tenth of 1 percent of the Democrats’ $1.9 trillion package — will help the IRS set up systems to distribute EIPs, advance child tax credit payments, and other aid, as well as improve taxpayer service and modernize agency systems. The funds are in addition to the IRS’s $12 billion fiscal 2021 budget.
The IRS didn’t respond to a request for further information on how the additional funds might be used and whether the bequest will assist the ongoing filing season.
The federal largesse contrasts with the congressional stinginess toward assisting the IRS in Affordable Care Act implementation following its enactment and Republicans’ regaining majorities in Congress. Even the GOP’s own Tax Cuts and Jobs Act provided the IRS only about $390 million for implementation of that law over two years.
“IRS employees are up to the task” of delivering stimulus payments and expanded child tax credits “even in the middle of a tax filing season,” Reardon said. “But the extra investment in technology is essential to giving them the tools they need to get the job done as quickly as possible,” he added.
IRS leadership has said it won’t extend the filing season, despite calls to do so from practitioner organizations and top congressional taxwriters.
Slicing the Pie
Of the $1.8 billion that would go to the IRS under the American Rescue Plan, $1.46 billion would be available until September 23, 2023, for administration of the EIPs, as well as “the provision of taxpayer assistance, and the furtherance of integrated, modernized, and secure Internal Revenue Service systems,” according to the bill text.
Of that amount, $20 million is allocated for “premium pay services,” available through December 31, 2022, to develop information technologies at the discretion of the IRS commissioner. An additional $7 million is reserved for the Treasury’s Bureau of the Fiscal Service to carry out its end of the EIP and other aid distributions through September 30, 2022. Another $8 million is allocated through September 30, 2023, for additional oversight of aid programs by the Treasury Inspector General for Tax Administration.
The IRS would receive another $397 million to administer advance payments of the child tax credit. That money would remain available until September 30, 2022.
That appropriation matches the sum that IRS Commissioner Charles Rettig said in February the agency would need to implement periodic advance child tax credit payments. However, the operational and administrative details of the IRS program remain unknown.
The bill would also give $16.2 million to the Bureau of the Fiscal Service to assist in advance child tax credit payments.
Relief for IRS Workers
Reardon also welcomed a provision in the bill expanding eligibility for workers’ compensation to IRS and other federal employees diagnosed with COVID-19, but whose duties require in-person contact or other virus exposure risks.
“There have been cases where federal employees who should be staying home, in quarantine, have insisted on coming into work because they don’t have enough personal leave and can’t afford leave without pay,” Reardon said. “This emergency leave benefit will help them and also protect their coworkers.”
The bill would provide up to 15 weeks of emergency leave, up to $1,400 per week, for federal employees unable to work because of the pandemic, including for quarantine times and child care responsibilities, Reardon noted.
“The President and Congress have done their part by providing the resources, and now frontline federal employees are stepping up to get the aid out the door efficiently and effectively,” the NTEU president said.