The IRS provided information on how it intends to use the $80 billion injection for better operations on Thursday, promising to invest in new technology, recruit more customer service agents, and increase its capacity to examine high-wealth taxpayers.
The new IRS Commissioner Daniel Werfel said the money from the Democrats’ historic climate change and health care plan will not go toward funding for more officers with guns, despite some Republicans’ unfounded claims to the contrary.
The IRS’s recently issued strategic operations plan outlines the specifics of how the $80 billion that was authorized by that law will be distributed, through the fiscal year 2031.
Certain improvements, including shifting more paper-based systems online and immediately returning taxpayers’ phone calls, have been anticipated for a while. Some are more ambitious, such as the ongoing research into how to develop a government-run computerized free-file tax return system.
The criminal investigation section, which accounts for 3% of the agency’s personnel and employs about 2,077 special agents as of the 2022 budget year, is not expected to have a staffing increase. The agents who might have weapons are those.
Werfel stated in a conference call with reporters that there are “no plans to grow” that division. It will continue to happen at the same pace.
Conservatives have argued that the IRS would use the additional funds to employ an army of 87,000 armed tax officers since President Joe Biden signed the “Inflation Reduction Act” in August.
That assertion is based on a plan the Treasury Department put forth in 2021 to hire that many IRS workers over the following ten years if it received funding. Over the following five years, at least 50,000 IRS employees are anticipated to retire.
The exact numbers for long-term hiring are not included in the strategic plan.
The plan “is heavily driven by the fact that we need to make technology investments that will improve productivity, which will mean that over time the number of employees and the mix of employees at the IRS will change,” Treasury Deputy Secretary Wally Adeyemo said during a conference call with reporters.
Treasury Secretary Janet Yellen instructed the IRS to create a plan describing how the tax agency would modernize its technology, customer service, and employment processes after Congress passed the law last summer. She instructed IRS management in a message not to raise audit rates for anyone earning less than $400,000 yearly.
In comparison to historical levels, officials promise not to “increase audit rates on small enterprises and households generating under $400,000 per year.” According to the report, $45.6 billion of the additional funding will be used to target high-net-worth people and businesses.
The paper stated that because of the scale and complexity of these tax files, this task frequently needs specialist methodologies. “We will employ data and analytics to enhance our understanding of high-wealth individuals’ tax filings.”
Officials from the Treasury and IRS have recently emphasized how the extra expenditure will affect internal procedures.
There have been some observable changes, according to Robert Nassau, director of the Low Income Taxpayer Clinic at Syracuse University College of Law.
He said, “That aspect of the IRS is running incredibly better. The phone line is incredibly enhanced.” Yet I can see that the written submissions processing time is still not up to par with pre-pandemic levels.
Since 2013, when it was discovered that the IRS under the Obama administration had carefully reviewed political groups seeking tax-exempt status, more funding for the IRS has been a source of political controversy. According to a study by the internal watchdog of the Treasury Department, both conservative and liberal groups were picked for detailed examination.
The national taxpayer advocate Erin Collins stated in a blog post that although the newly unveiled plan places an excessive emphasis on enforcement, “for the first time in my 40 years as a tax professional, the tax administration stars seem to be aligning.”
The financing will more than pay for itself by guaranteeing that the IRS can hold the extremely affluent and major corporations accountable, according to Jean Ross, a senior fellow at the Center for American Progress.
