Details on the Internal Revenue Service’s spending plans for a major cash influx are about to come to light, Treasury Secretary Janet Yellen said Tuesday.
More than half a year after Congress authorized $80 billion to the tax agency over the next decade, Yellen said more details are coming this week on how the IRS will put the money toward improving customer service, internal technology and making sure rich taxpayers are paying their full tab.
The $80 billion infusion is part of the Inflation Reduction Act, which passed Congress last summer without Republican support, but plenty of GOP skepticism that the additional funding would get used well.
Yellen spoke Tuesday at the swearing-in ceremony for Danny Werfel, the newly-confirmed IRS commissioner. Werfel “will lead the IRS through an important transition” after the agency “suffered from chronic underinvestment,” Yellen said in prepared remarks.
During Werfel’s February confirmation hearing, senators on from both parties pressed him on how he would oversee the money’s use.
The U. S. House of Representatives is under Republican control, and observers expect lawmakers to give hard looks at the extra money to the IRS. The House voted in January to repeal the $80 billion. The measure isn’t expected to go much farther with Democrats retaining control in the Senate and President Joe Biden, a Democrat, in the White House.
Some of the money will go toward modernizing the taxation experience. By the first five years of the decade-long plan, taxpayers should be able to file all of their tax documents and respond to all IRS notices online, according to a Treasury official.
There are a handful of IRS notices where taxpayers currently have that capacity. By the end of fiscal year 2024, another 72 extra notices, which include Spanish language notices, will have online capacity, the official said.
By the end of fiscal year 2025, taxpayers, along with accountants and other professional tax preparers, should be able to peruse their account to view and download information including payments and notices, the official noted.
The IRS has already been hiring more staff, including 5,000 customer service representatives to help with phone service, which has fallen off during the pandemic.
Tax Day is weeks away, on April 18. As of late March, income tax refunds are 11% lower than they were last year. They are an average of $2,903 versus $3,263 at the same point last year. It’s an outcome many tax code watchers predicted after pandemic-era boosts to certain tax credits went away.
The same day Yellen spoke, a new watchdog report said the IRS still has plenty of work to do processing the backlog of tax returns that built up during the pandemic.
During last year’s filing season, the IRS hired 9,000 employees and shifted more than 2,400 workers from other areas to cut the backlog, according to the Treasury Inspector General for Tax Administration.
By July 2022, the IRS had transcribed all tax year 2020 paper returns but still had 9.5 million unprocessed tax year 2021 paper returns. “The inability to timely process tax returns and address tax account work continues to have a significant impact on the associated taxpayers,” the report said.
At this point, the IRS says it has processed all paper and electronically-filed returns that it received before January 2023. The agency said it still has 2.17 million unprocessed tax returns from tax year 2022, or tax year 2021 returns that need fixes and corrections.
This post was originally published on Market Watch
