Fixing the IRS
In August 2022, when President Biden signed into law the so-called Inflation Reduction Act, it included an $80 billion increase in IRS funding. According to a 2021 Treasury Department report, this funding was intended to increase the IRS workforce by 87,000 employees, primarily dedicated to increasing IRS’s capacity to audit taxpayers. While the Biden-Harris administration has gone to great lengths claiming this cash infusion for the IRS is not directed to a massive workforce expansion, will not be used to expand audits of families and small businesses, and is focused on improving customer service, these lies continue to be exposed.
In her mid-year report to Congress, the head of IRS’ internal Taxpayer Advocate Service Erin Collins indicated less than one-fifth of the 2.1 million people who called the IRS collections phone line reached a representative. Many hung up in frustration over long wait times or got directed to recorded messages. As of April of this year, identity-theft cases were going unresolved for as much as 22 months at the IRS. At the time, the agency had approximately 500,000 unresolved cases in its inventory. Speaking to the need to make effective changes, Collins said, “Let’s not throw bodies at the problem. Let’s think differently.” I appreciate this commonsense reasoning, as throwing bodies at the problem amounts to throwing taxpayer dollars at the problem.
During the month of August 2024, reports from the U.S. Treasury Inspector General for Tax Administration (TIGTA) revealed the IRS is failing to update the agency's outdated information systems and has failed to implement protections for law-abiding American families and small businesses from unnecessary audits.
It is no secret how outdated technology infrastructure used by many major federal agencies continues to harm everyday Americans. Modernization of antiquated IRS systems is badly needed to improve taxpayer service and better protect Americans’ personal data. Yet one TIGTA report found, and the IRS subsequently confirmed, it has no plans to decommission and replace the vast majority of its outdated technology systems.
Another TIGTA report showed the IRS has not yet finalized any methodology for calculating audit coverage in 2018, the historical year against which it is basing compliance with a 2022 directive from Treasury Secretary Janet Yellen not to increase IRS audits of taxpayers earning less than $400,000.
This validates what has been clear all along. Secretary Yellen’s instruction was not a serious policy directive. Instead, it was hollow political messaging. Not only has the IRS made little demonstrable progress on this directive, it is clear the IRS will need to shift resources away from audits focused on instances of more consequential fraud and improper payment rates to instead target law-abiding small business owners and middle-class families in order to meet its own internal targets.
To address inefficiencies and hold the IRS accountable, the best course of action is to enact my bill—the first bill passed by House Republicans in January 2023—to repeal the remainder of IRS’s $80 billion in mandatory funding. This bill would also preserve funding for customer service and IT modernization at the IRS. Rather than dumping billions into a failing IRS, Congress should instead be working through the regular appropriations process to ensure the IRS is appropriately funded and is prioritizing cases with the highest likelihood of fraud or error for audit. This is the correct way to provide funding for federal agencies. One of the primary reasons we fund federal agencies on an annual basis is to ensure appropriate oversight of the executive branch, and it is clear this $80 billion infusion is a barrier to proper oversight.
Biden-Harris policies of harmful new taxes and wasteful spending, including a bloated IRS, Babysitter Tax schemes to monitor small, everyday digital transactions, and new ways to crackdown on tips received by service workers, do not empower American families and small businesses. Instead of focusing on improvements to basic needs like IT and customer service, they empower the IRS to conduct costly audits on law-abiding Americans. We can do much better. The IRS can and should work better for American taxpayers.