- The Washington Times - Thursday, April 6, 2023

The IRS released a 10-year plan Thursday outlining how it plans to spend the $80 billion in new money Democrats pumped into the tax agency as part of last year’s climate change budget law, promising the cash will help go after high-dollar tax cheats and fix the agency’s abysmal customer service.

IRS officials promised “fundamental changes” at the agency, including what they called “dramatically” improved customer service, faster responses to taxpayer problems and a major push to upgrade decrepit technology.

Commissioner Danny Werfel, newly sworn in, also vowed to stick to the promise Biden administration officials made not to raise audit rates “above historical levels” for taxpayers making less than $400,000.

But the new plan still doesn’t say what, exactly, that means, leaving open the possibility that those lower-income taxpayers could still see a significantly higher chance of an audit.

IRS officials celebrated the plan as a chance to bring the agency into the 21st century with the kind of staffing and technology agency officials have long said they needed but were denied by austere budgets from Congress.

“The plan is a bold look at what the future can look like for taxpayers and the IRS,” Mr. Werfel said. “Now that we have long-term funding, the IRS has an opportunity to transform its operations and provide the service people deserve.”

He promised an agency experience that “will look and feel much different from the IRS of today.”

The new plan pushes back on fears of a massive new army of IRS auditors and criminal investigators probing average Americans’ finances.

Officials said they will go on a hiring spree, but their goal is to bring the agency back to “historic levels” of staffing. Once they reach that, any personnel hired behind that level will be dedicated to targeting taxpayers at or above the $400,000 income level.

The IRS gave a benchmark for its historic levels of staffing, citing the 95,370 employees it had in 2010. Today it counts 80,006 positions.

All sides agree that the IRS’ customer service has been horrendous.

Despite hiring 9,000 new employees, the agency still ended up far behind in last year’s filing season.

It 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.

That was worse than 2021, despite the Biden administration’s promises it would do better.

More controversial than the customer service is the agency’s plans to increase audits — and its unwillingness to say exactly who will get hit.

In 2019, the latest year for which figures have been released, the IRS audited just a quarter of a percent of tax returns. In 2010, it was nearly 1%. Those with incomes over $10 million saw their audit rates drop from 21.2% to just 3.9%.

If the IRS goes back to those 2010 rates, it could mean the average taxpayer would see four times the risk of an audit under the agency’s new plan.

Democrats who backed the $80 billion in IRS money are eager to see at least some new audits.

“For too long the IRS has lacked the tools it needs to go after rich tax cheats and those billion-dollar corporations that have used various schemes to hide their wealth and fail to pay what they already owe. It’s time that these corporations and individuals paid the taxes that are due rather than have the rest of the country pick up the tab,” said Sen. Chris Van Hollen, Maryland Democrat and chairman of the Senate subcommittee that oversees IRS funding.

Republicans, though, want to see the IRS trimmed.

“It’s clear that this is big government at its worst and I hope to see all of my colleagues oppose this wasteful use of taxpayer dollars,” said Sen. Steve Daines, Montana Republican.

The GOP-led House has already passed legislation to claw back the $80 billion infusion. That legislation won’t move through the Democrat-controlled Senate, but GOP lawmakers have signaled they will try to tame the IRS through the annual appropriations process.

Mr. Werfel said Thursday that any attempt to cut the IRS below its current annual funding levels would upset his new plan, forcing him to limit his ambitious makeover.

“This would be to the detriment of the service, technology, and compliance initiatives envisioned to transform the IRS,” he said.

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

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