Reimagining the IRS Funding Debate

Partisan Disagreements on IRS Funding

WASHINGTON (TND) — The debate over the Internal Revenue Service’s (IRS) multibillion-dollar investment took center stage during commissioner Daniel Werfel’s testimony in front of the House Ways and Means committee.

Republicans criticized the IRS, claiming it was failing taxpayers and wasting portions of the $80 billion investment from the Inflation Reduction Act. Democrats, on the other hand, praised the agency’s progress and highlighted its efficiency.

Political Implications for the IRS

The upcoming 2024 election could determine the future of the IRS. The political party that controls Congress and the White House will have a significant impact on the agency’s fate.

Since gaining a slim House majority, Republicans have targeted IRS funding in various bills to offset government spending. Their first bill aimed to repeal the new funding for additional agents focusing on auditing wealthy taxpayers.

Contrasting Views on IRS Funding

Committee chairman Rep. Jason Smith, R-Mo., raised concerns about the IRS’s implementation of an IRS direct file scheme, its spending of the $80 billion windfall, and its unrealistic claims about increased audit revenue.

Rep. Lloyd Dogget, D-Texas, argued that cutting funding would hinder efforts to ensure that corporate and high-wealth tax evaders pay their fair share.

Closing the Tax Gap

The IRS plans to use the funding to increase audits and close the “tax gap” — the difference between legally owed taxes and those actually paid. The tax gap has grown due to the complexity of the tax code and the IRS’s staffing and technological challenges in conducting audits.

Reports from the nonpartisan Congressional Budget Office (CBO) and other groups support the idea that providing long-term funding to the IRS would help close the tax gap and reduce the federal deficit, projected to reach $54 trillion in the next decade.

Projected Revenue Increases

In 2022, the CBO estimated that the IRS funding would generate over $180 billion in additional revenue from 2022 to 2031. However, other analysts believe this figure to be conservative.

A recent report by the Treasury Department and the IRS suggests that tax revenues could increase by up to $561 billion over the next decade if the portion of funding taken away in the debt ceiling deal is restored.

Improved Customer Service

Another vital aspect of long-term funding is enhancing customer service. Prior to the funding, taxpayers faced long wait times and closed help centers.

The IRS has made significant progress in customer service. A report published by the Government Accountability Office (GAO) revealed that the IRS answered 7.7 million calls during the 2023 filing season, a 65% increase from the previous year. Average wait times also improved from 28 to three minutes.

The National Taxpayer Advocate’s report on the 2023 tax season highlighted the vast improvement in IRS service quality.

The Challenge of Further Funding

Republicans have indicated a willingness to maintain some funding to support customer service. However, the politics surrounding IRS funding may hinder the passage of new legislation. Some lawmakers question why the IRS is requesting an additional $800 million in appropriations when only 4.5% of the funds have been spent so far.

The Future of the IRS

The future of the IRS also hinges on the party that controls the White House. President Joe Biden has been a vocal advocate for long-term funding and is likely to resist any attempts to reduce the IRS’s budget. In contrast, former President Donald Trump proposed mixed funding levels for the IRS during his time in office.

Read More of this Story at kpic.com – 2024-02-16 18:46:51

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