IRS sets withholding tables as GOP pledges paycheck increase

President Donald Trump has touted that the public will start seeing the tax cuts in February when the new withholding tables reflecting the updated tax code are put in place

IRS sets withholding tables as GOP pledges paycheck increase

The Internal Revenue Service has estimated it may need almost half a billion dollars more over the next two years to implement the new tax law passed by Republicans and signed by President Trump just before Christmas, the agency's independent taxpayer advocate said Wednesday. This will minimize burden on taxpayers and employers.

Treasury Department officials said on Thursday that they did not expect significant changes in the number of taxpayers who receive tax refunds.

In the meantime, on Thursday, a senior IRS official speaking on background during a phone call press conference explained that the new withholding table is the first installment in a three-step process created to ensure wage earners have the correct amount of taxes withheld, preventing under or over paying.

Last year's IRS budget was $11.2 billion.

USA Today reported that last year's budget for the IRS budget was $11.2 billion, but that Congress still has not set funding levels for federal agencies, even though the current fiscal year began on October 1.

The dismal call-response rate - and other challenges the IRS faces in trying to clear up confusion and administer the new tax law - is due in part to funding cuts that have essentially shrunk the IRS budget by 20% since 2010.

A similar impact is expected from the Republican tax law. Ron Wyden, the top Democrat on the Senate Finance Committee, said in a statement. Its employee-training budget has been cut by nearly 75 percent since fiscal 2009. "Then they can decide what they want to do", the senior IRS official said.

Starting next month, you should see a bump in your paycheck.

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Another reason additional funds are needed is that although the tax bill was originally promoted as a simplification of the code, new complications have been added in some cases, including exemptions for most refinancings of home mortgages and loans closed after December 15 that had prior binding purchase contracts. Yet the IRS does not have access to dates of mortgage closings.

Whether the IRS gets additional funding remains a question.

"The IRS will have its hands full in implementing the new law", said Nina E. Olson, the taxpayer advocate, according to prepared remarks. "'Shortcuts" have become the norm and "shortcuts' are incompatible with high-quality tax administration".

The report noted that previous tax legislation also caused big spikes in the agency's workload. In some cases, Olson wrote, the IRS paid commissions to agencies for payments that were attributable to the IRS itself and not the agencies.

But that does not mean the IRS has a year to get up to speed.

The new law makes a number of changes for 2018 that affect individual taxpayers.

Workers who are up for a tax cut should start seeing bigger paychecks in the coming weeks, now that the Internal Revenue Service has released guidance for employers about how much tax they should withhold from employees' take-home pay in 2018.

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