President Biden signed the Fiscal Responsibility Act of 2023 (FRA) (H.R. 3746) into law on Saturday, June 3, 2023. The FRA addresses the debt ceiling and caps some spending over the next two years, and rescinds some of the $80 billion in IRS funding provided by the Inflation Reduction Act of 2022 (IRA) (H.R. 5376); over half of that $80 billion ($45 billion) was aimed at enforcement efforts, nearly doubling the IRS’s current enforcement budget. Specifically, the FRA will suspend the federal debt limit through Jan. 1, 2025, and increase the limit on Jan. 2, 2025, to accommodate the obligations issued during the suspension period. Additionally, the FRA will rescind approximately $1.39 billion that was provided to the Internal Revenue Service (IRS) pursuant to the IRA.
Furthermore, the FRA calls for an additional $20 billion in appropriations funding to be reallocated during 2024 and 2025, $10 billion to be repurposed in 2024, and $10 billion to be repurposed in 2025. The FRA does not impact the renewable energy incentives originally provided by the IRA.
CohnReznick’s National Tax Team is carefully monitoring legislative developments, including that of the FRA, with a keen focus on how it may impact our clients from a federal tax perspective. For more information, please reach out to any member of our National Tax Team.
Subject matter expertise
CPA, Partner, Practice Leader, Federal Tax Services
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