POLITICO: Democrats: Stay away from that IRS funding

KEEP THAT FENCE AROUND THE FUNDING: A government shutdown feels exceedingly close — just over a week away, if it actually happens — which means that officials up and down Pennsylvania Avenue are deep into their preparations.

First up, on the Hill: Republicans already succeeded in clawing back some of the extra funding that the IRS got from Democrats last year to toughen up enforcement measures, as part of this spring’s debt limit deal.

Now, dozens of Democrats are prodding House Minority Leader Hakeem Jeffries to make sure the agency doesn’t suffer any further cuts in an eventual deal to either keep the government funded or get it running again.

Worth noting: The 56 House Democrats on the letter — which was led by a pair of senior tax writers, Reps. Lloyd Doggett of Texas and Don Beyer of Virginia — stopped short of saying they’d oppose any deal that cut IRS funding. Instead, they wrote that they would have “extremely serious concerns” about voting for such an agreement.

Still, the Democrats’ strong defense of the tax collector also suggests that they’re still brushing off all those Republican criticisms about the increased IRS funding, and the higher audit rates that would come with it.

The “clearly politically motivated” cuts that Republicans are seeking, the Democrats wrote, would hurt the IRS’s ability to collect more taxes owed from the rich and also create new products for regular taxpayers, like a potential agency-run filing portal.

Grassroots groups are backing up the Democrats. Groundwork Action released a statement praising the letter led by Doggett and Beyer, saying it was grateful to the House Democrats for “fighting to crack down on millionaires and billionaires who are abusing the system.”

GET YOUR AFFAIRS IN ORDER: For its part, the executive branch is getting ready for what seems to be the likely outcome come Oct. 1.

The White House budget office is set to tell federal agencies today that they better update their shutdown contingency plans if they haven’t already, an Office of Management and Budget official told our Budget team’s Caitlin Emma.

To be fair: It’s a pretty standard line from a White House whenever the government gets this close to running out of money, even when it seems likely that a deal will come together.

But it also underscores that there’s still some back-and-forth going on as key government offices make their final preparations — like at the IRS, for instance.

It was just a few days ago that the National Treasury Employees Union, which represents tens of thousands of IRS workers, said its understanding was that the IRS would be open without any restrictions during a shutdown, because of that funding from the Inflation Reduction Act.

Then on Thursday, NTEU said it feared that might no longer be the case. Doreen Greenwald, the union’s president, said that NTEU heard from members that a new IRS shutdown plan would call for furloughing some employees.

Greenwald added that the union then started to alert IRS staffers that they might not get paid if a shutdown occurred — though as she also acknowledged, the agency hasn’t yet released its final plan, so it’s impossible to know the full details.

In fact, the NTEU has been the source for most of the announcements this week on how the IRS might proceed in a shutdown, with both the agency and the Treasury Department declining to comment.

HOW UNSCATHED ARE THEY? Remember when the IRS announced last year that it had gotten rid of some 30 million information returns that taxpayers had filed?

The agency has said that no taxpayer was hurt because those documents were destroyed, but Senate Republicans are raising new questions about the claim.

For instance, Tax Notes reported last month that the missing forms likely led to audits for some taxpayers who claimed the Earned Income Tax Credit — essentially because the IRS had destroyed the very information returns that would have been used to verify a recipient’s income.

Now, all 13 Republicans on the Senate Finance Committee are asking IRS chief Danny Werfel for more information on the matter. The GOP tax writers wrote that there are “significant issues” with the IRS’s contention that no one was harmed by the destruction of the documents, which they say was “significantly undermined” by the findings on EITC recipients.

With that in mind, the Republicans are asking for more information on just how many taxpayers claiming the EITC might have run into problems because of missing information returns — and noted that they had raised questions about this distinct possibility as early as last year.