- The Washington Times - Thursday, April 27, 2023

New IRS Commissioner Danny Werfel told Congress on Thursday that taxpayers with incomes under $400,000 won’t have to worry about an increase in their rate of audits for “several years.” For now, he said he’s pouring all of his new audit money into high-income filers.

He also acknowledged that his agency is hiring some armed investigators, but said they are a tiny fraction of the overall hiring. He said most of his focus is on audits and customer service.

Mr. Werfel was defending his request for $1.8 billion in extra money next year, on top of an $80 billion plus-up the IRS received in last year’s budget-climate bill. That $80 billion will be stretched out over the next decade.

He said his chief focus for the next few years will be wealthy people, whom he believes are getting away with tax evasion because his agency doesn’t have the capacity to go through their filings. He said those tax returns can be tens of thousands of pages long.

“The reason we need a lot of people is for billionaires and multinational corporations. It’s just a complicated return,” he said.

Mr. Werfel promised a full hiring plan in the coming weeks but said his agency has to grow.

“I want to right-size the IRS,” he said. “I’ve heard the phrase ‘supersize the IRS.’ That is not the intent. We have to meet the demand.”

Republicans weren’t convinced the IRS will handle things right, and worried about the number of new auditors.

“It scares the hell out of the American taxpayer,” said Rep. Gregory Murphy, North Carolina Republican.

He held up a graph showing the increase in audit staff will be much larger than the increase in customer service staff. Mr. Murphy said that seemed out of whack for an agency that has abysmal levels of service.

Under questioning from Democrats, Mr. Werfel said no new armed agents will be hired to perform audits.

But under questioning from Republicans he acknowledged 1,200 armed criminal investigators are being hired to pursue special cases of fraud or “acute” tax evasion.

“They’re armed when they’re putting themselves in danger,” he said.

Mr. Werfel said that for the “next several years” the IRS will maintain the same audit rates on lower-income filers that it had in 2018. He said it will probably be 2026 before he catches up on the top-end audits and turns his attention to average taxpayers.

In 2018, those making under $25,000 saw audit rates of 4 out of every 1,000 returns. Those making between $25,000 and $500,000 saw audit rates of 1 or 2 out of every 1,000 returns.

By contrast, in 2010, those making under $25,000 saw rates of 10 in every 1,000. And those making between $200,000 and $500,000 saw rates of 23 per 1,000 returns.

Those making $10 million or more were audited at a rate of 39 per 1,000 returns in 2018. In 2010, they were audited at a rate of 212 per 1,000 returns. That’s a drop of 81%.

That 2010 figure looms large because officials have said that’s the year before budget cuts began to sap the IRS of labor, and it represents an outside limit on how high audit rates might return for lower-income filers.

The IRS had more than 4 million unprocessed paper tax returns as of Sept. 30, which was five months after the regular April filing deadline.

And those trying to get help from the IRS also found an unresponsive agency. Taxpayers made nearly 150 million attempts to reach the agency between Jan. 1, 2022, and Sept. 24, 2022. Fewer than 38 million of those calls were answered — 29 million with an automated system and 8.8 million by IRS assistants.

Those who got through waited an average of 31 minutes.

Mr. Werfel said the agency has done better on customer service this year, but said if Congress wants to help, it needs to fund his request for $1.8 billion in more money for 2024.

He said $1 billion of that will go to people operating the phones and processing returns, while the other $800 million is just to keep up with inflation.

“It’s mostly taxpayer services,” he said.

• Stephen Dinan can be reached at sdinan@washingtontimes.com.

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