As the IRS faces scrutiny from a Republican-controlled Congress, the agency’s internal watchdog has urged lawmakers to preserve taxpayer service and technology funding.

The National Taxpayer Advocate on Wednesday released its annual report to Congress, which criticized the “extreme imbalance in funding priorities” when comparing the billions of dollars allocated via the Inflation Reduction Act.

While the tens of billions earmarked for enforcement has “generated controversy,” there’s been “strong bipartisan support” for taxpayer services and technology modernization, wrote Erin Collins, national taxpayer advocate.

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Of the original $78.9 billion Inflation Reduction Act funding, the legislation earmarked 58% for enforcement and 32% for operations support, according to the report. By comparison, the budget allocated 4% for taxpayer service and 6% for technology modernization.  

With sufficient funding for services and technology, “taxpayer experiences will become fairer and more efficient, which likely will improve compliance and reduce the need for costly backend enforcement,” Collins wrote.

During fiscal year 2024, the IRS collected $98.7 billion through enforcement, which was less than 2% of all revenue, according to the agency’s 2024 financial report. The remaining 98% of federal taxes were “self-assessed” via annual tax returns and timely payments. 

If Congress reduces enforcement funding, it shouldn’t include commensurate cuts to taxpayer services and technology, which could “inadvertently throw the baby out with the bathwater,” Collins wrote. 

With added costs to “pull itself out of the pandemic” and yearly appropriations held steady amid rising costs over the past few years, the IRS has needed to spend part of its multi-year funding to maintain current operations, she added.  

Congress rescinded $20 billion in IRS funding as part of a 2023 budget deal, and Republicans have vowed to make further cuts. Another $20 billion was automatically clawed back when lawmakers in December extended the 2023 deal to avoid a government shutdown.  

Further IRS funding cuts could be possible in 2025 with Republican control of Congress and the White House.

Federal student loan borrowers affected by the wildfires ripping across Southern California have relief options if they’re worried about keeping up with their payments as they recover.

The same holds true for other people with education debt who find themselves grappling with extreme weather and climate disasters.

“Borrowers impacted by natural disasters may qualify for temporary relief from student loan payments,” said Carolina Rodriguez, director of the Education Debt Consumer Assistance Program, based in New York.

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It’s a good idea for borrowers to familiarize themselves with the relief available to them in case they should need it, experts said.

There was a record number — 28 — of billion-dollar disasters in the U.S. during 2023, including wildfires, droughts and tornados, according to the National Oceanic and Atmospheric Administration. By November of 2024, there were 24 confirmed weather and climate disaster events with losses also exceeding $1 billion each.

Here’s what federal student loan holders should know about their options during a natural disaster.

At Studentaid.gov, the Education Department says its federal student loan servicers check the Federal Emergency Management Agency website at least once each business day to identify all impacted areas connected to a disaster declaration.

In many cases, the U.S. Department of Education will automatically put qualifying borrowers into a natural disaster forbearance, Kantrowitz said.

“Borrowers generally do not need to apply for this,” he added. Still, borrowers who want to make sure their payments are paused might want to contact their loan servicer.

The natural disaster forbearance lasts for up to 90 days, according to the Education Department. In some cases, borrowers will be granted 30-day extensions. However, the forbearance can’t exceed 12 monthly billing cycles from the date of the disaster. (Loan interest continues to accrue during the payment pause.)

Meanwhile, those who want to decline the automatic natural disaster forbearance because they’re able to make their payments should contact the Education Department to do so.

Borrowers who are students at the time of a natural disaster may continue to qualify for an in-school deferment, Kantrowitz said, even if they’re not able to complete the school year.

If you’re in default on your student loans and impacted, you or a family member can contact the Education Department and request a three-month suspension of collection activity.

If you’ve lost any of your student loan records in a disaster, you can access the information through your Studentaid.gov account.

If the natural disaster is not federally-declared or borrowers aren’t deemed eligible for the forbearance for some reason, they can still request a temporary payment pause by applying for a general forbearance with their servicer, EDCAP’s Rodriguez said.

Borrowers should keep in mind that interest can continue to accrue on their debt during a forbearance, and that they might not get credit toward a debt forgiveness program while they’re not making payments, she added.

You’ll likely have fewer disaster relief options with your private student loans, Rodriguez said.

Still, she said, “it is essential to reach out to private lenders as soon as possible to explore available relief and prevent delinquency or default.”

Many Americans are starting 2025 a little worse off than before, at least when it comes to credit card debt.

Almost half of cardholders — 48% — now carry debt from month to month, according to a new report by Bankrate. That’s up from 44% at the start of 2024. Of those carrying balances, 53% have been in debt for at least a year.

Roughly 47% of borrowers said they carry a balance due to an unexpected or emergency expense, most commonly medical bills or car and home repairs. Others cite higher day-to-day expenses and general overspending.

“High inflation and high interest rates have been a nasty combination, and while the worst is behind us, the cumulative effects are significant and will linger,” Ted Rossman, Bankrate’s senior industry analyst, said in a statement.

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Overall, Americans’ credit card tab has continually crept higher. 

The average balance per consumer now stands at $6,380, up 4.8% year over year, according to the latest credit industry insights report from TransUnion from 2024’s third quarter.

By way of example: With annual percentage rates just over 20%, if you made minimum payments toward the average credit card balance ($6,380), it would take you more than 18 years to pay off the debt and cost you more than $9,344 in interest over that time period, Rossman calculated.

Meanwhile, 36% of consumers added to their debt load over the holiday season, according to a separate report by LendingTree.

Of those with debt, 21% expect it’ll take five months or longer to pay it off, LendingTree found. 

According to another report by WalletHub, 24% of Americans said they will need more than six months to pay off their holiday shopping debt. In that survey, most consumers said inflation caused them to spend more than they initially planned.

“Many people need months to repay holiday bills after overspending,” said John Kiernan, editor at WalletHub.

The best move for those struggling to pay down credit card debt is to consolidate with a 0% balance transfer card, Bankrate’s Rossman said.

“You could pay about $300 per month and knock out the average credit card balance in 21 months without owing any interest,” he said.

As it stands, 30% of credit cardholders expect to pay off their credit card debt within a year, while 41% expect to pay it off in 1 to 5 years, Bankrate also found. Another 13% expect it will take more than a decade.

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