Accounting
Tax collections lift Treasury’s cash pile by most since 2022
Tax collections are confirming Wall Street forecasts that the U.S. government will not exhaust its borrowing capacity until later this year.
The U.S. Treasury’s cash balance climbed again on Wednesday to reach a total of $639 billion — after soaring some $185 billion the day prior, the most in three years — amid inflows around the April 15 tax deadline.
“Individual income tax receipts remained stronger than we expected,” wrote Lou Crandall at Wrightson ICAP in a note to clients Thursday. That reinforces “our view that the X-date would be a late-third-quarter event even under the traditional playbook,” Crandall added, referring to the date at which the Treasury breaches the debt limit.
Much of the tax collection increase has been driven by a surge in individual, non-withheld taxes paid electronically, which are now trending well above last year’s levels.
“In total, non-withheld tax receipts have come in strong this year so far, despite some concerns over staffing cuts at the IRS, fraud, and delayed filings in disaster-affected areas,” wrote JPMorgan strategists led by Jay Barry in a note. Barry reiterates an X-date of Aug. 1, giving Congress some time to agree on new debt-ceiling legislation.
The final tally matters for a number of reasons. In the near-term, the amount of cash flowing out of the money markets to pay Uncle Sam can impact funding costs. Higher tax receipts means more liquidity is drained from the overall financial system, likely pushing up the cost of borrowing in the overnight repurchase market.
If more money is flowing out of bank reserves and money markets that carries implications for the Federal Reserve’s quantitative tightening program. The central bank eased the pace of runoffs to $5 billion per month this April. Fed Chair Jerome Powell reiterated this week that the
Here are the key metrics to watch in the funding markets in the weeks ahead.
Bank reserves
Fed officials and investors are keeping a keen eye on the amount of cash banks park at the central bank, gauging what level is enough to maintain liquidity and avert too much stress in the plumbing that underpins the financial markets. As reserves become more scarce, a level primary dealers estimate to be around $3 trillion, the U.S. central bank will likely have to halt its balance sheet unwind.
Bank reserves totaled $3.3 trillion in the week through April 16 from $3.5 trillion the prior week, Fed data show. That’s above the level they were when the central bank started unwinding its balance sheet almost three years ago.
Money-market fund assets
In the week including the April 15 tax deadline, money-market fund assets fell by some $125 billion to $6.88 trillion, according to ICI
Global market volatility spurred by the Trump administration’s tariffs has renewed focus on money-market funds, which are considered attractive investment vehicles during periods of uncertainty as they command higher yields and are perceived as a haven.
Treasury’s cash balance
Whether the U.S. government can meet its fiscal obligations and pay its debts ultimately comes down to whether it has the cash. That balance is affected by daily inflows and outflows.
The Treasury’s cash balance saw its largest one-day increase in three years on April 15, Treasury figures show. It further rose to some $639 billion the day after, according to
Bloomberg via Getty Images
Amid the agency’s turmoil this year, the Internal Revenue Service has some good news from 2024 regarding service and collections.
The agency helped taxpayers on 62.2 million occasions in FY24, up 3.2% over the prior fiscal year, and took in a new high in revenue, according to its latest annual
IRS toll-free customer service lines provided live telephone assistance to almost 20 million callers during the fiscal year, up some 11% from 2023. At Taxpayer Assistance Centers, the agency helped more than 2 million taxpayers in person, an increase of almost 26% over FY2023.
For the first time, revenue collected exceeded $5 trillion ($5.1 trillion), an increase of almost 9% compared to the prior fiscal year total.
The Data Book gives a fiscal year overview of the agency’s operations, including returns received, revenue collected, taxpayer services provided, tax returns examined (audits), efforts to collect unpaid taxes and other details. Among other FY24 highlights, the IRS:
- Launched more digital tools than it had during the previous 20 years. Online offerings saw more than 2 billion electronic taxpayer assistance transactions, 47% more than in FY23. The most popular features were requests for transcripts and Where’s My Refund? Overall, IRS.gov registered nearly 690 million individual visits with 1.7 billion page views.
- Processed more than 266 million returns and other forms from individuals, businesses and tax-exempt organizations; received almost 4.6 billion information returns; and issued close to $553 billion in refunds.
- Closed 505,514 tax return audits, resulting in $29 billion in recommended additional tax.
The net collections — federal taxes that have been reported or assessed but not paid and returns that have not been filed — totaled almost $77.6 billion, an increase of 13.6% compared to FY23. The agency collected more than $16 billion through installment agreements, an increase of more than 12% compared to the prior fiscal year.
The Data Book also covers statistics on Direct File, taxpayer attitude surveys about satisfaction with the IRS and “acceptable” levels of cheating on taxes, and applications for tax-exempt status, among other topics.
Total postsecondary spring enrollment grew 3.2% year-over-year, according to a report.
The National Student Clearinghouse Research Center published the latest edition of its
The report found that undergraduate enrollment grew 3.5% and reached 15.3 million students, but remains below pre-pandemic levels (378,000 less students). Graduate enrollment also increased to 7.2%, higher than in 2020 (209,000 more students).
(Read more:
Community colleges saw the largest growth in enrollment (5.4%), and enrollment increased for all undergraduate credential types. Bachelor’s and associate programs grew 2.1% and 6.3%, respectively, but remain below pre-pandemic levels.
Most ethnoracial groups saw increases in enrollment this spring, with Black and multiracial undergraduate students seeing the largest growth (10.3% and 8.5%, respectively). The number of undergraduate students in their twenties also increased. Enrollment of students between the ages of 21 and 24 grew 3.2%, and enrollment for students between 25 and 29 grew 5.9%.
For the third consecutive year, high vocational public two-years had substantial growth in enrollment, increasing 11.7% from 2023 to 2024. Enrollment at these trade-focused institutions have increased nearly 20% since pre-pandemic levels.
Jordan Vonderhaar/Photographer: Jordan Vonderhaar/
The Internal Revenue Service has released
The Inflation Reduction Act of 2022 amended Sec. 55 to impose the CAMT based on the “adjusted financial statement income” of an “applicable corporation” for taxable years beginning in 2023.
Among other details, proposed regs provide that “applicable corporation” means any corporation (other than an S corp, a regulated investment company or a REIT) that meets either of two average annual AFSI tests depending on financial statement net operating losses for three taxable years and whether the corporation is a member of a foreign-parented multinational group.
Prior to the publication of any final regulations relating to the CAMT, the Treasury and the IRS will issue a notice of proposed rulemaking. Notice 2025-27 will be in IRB: 2025-26, dated June 23.
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