How the IRS works

The Internal Revenue Service brings in approximately 96% of the federal government's funding every year. In fiscal year 2021 alone, the IRS collected $4.1 trillion dollars in gross taxes. But funding for the agency declined by more than 20% between 2010 through 2019 when adjusted for inflation. This budget squeeze corresponded with a decline in tax audit rates across all income brackets, with the highest earners seeing the largest percent change. In August 2022, President Biden signed the Inflation Reduction Act into law, which set aside nearly $80 billion for the IRS to be used over the next 10 years. Watch the video above to learn more about how the IRS works and how budget cuts have affected the agency.