The White House had released President Donald Trump’s fiscal year (FY) 2021 budget proposal, which outlines his administration’s priorities for extending certain tax cuts and increasing IRS funding. Treasury Secretary Steven Mnuchin testified before the Senate Finance Committee (SFC) regarding the FY 2021 budget proposal.
Extension of TCJA’s Individual Tax Cuts
Trump’s FY 2021 budget proposal indicates that tax cuts for individuals and passthrough entities under the Tax Cuts and Jobs Act (TCJA), which are set to expire at the end of 2025, would be extended. This extension is estimated to cost $1.4 trillion over 10 years and is reportedly being used as a “placeholder” in the budget for Trump’s forthcoming “Tax Cuts 2.0” plan.
Infrastructure
Trump’s budget proposal also calls for a $1 trillion infrastructure package, although funding details remain scarce at this time. In January, House Democrats unveiled their infrastructure proposal, which also lacked funding details.
IRS Funding
Additionally, Trump’s budget proposes $12 billion in base funding for the IRS “to modernize the taxpayer experience and ensure that the IRS can fulfill its core tax filing season responsibilities.” The budget proposal would boost IRS funding from currently enacted levels of $11.5 billion.
Further, the budget would provide $300 million to continue the IRS’s modernization efforts. Specifically, the budget proposal states that IRS funding would help to:
- digitize more IRS communications to taxpayers, so they can respond quickly and accurately to IRS questions;
- create a call-back function for certain IRS telephone lines, so taxpayers do not need to wait on hold to speak with an IRS representative; and
- make it easier for taxpayers to make and schedule payments online.
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