Committee chairman Rep. Jason Smith (R-Mo.) arrives for a House Ways and Means Committee hearing on Capitol Hill in Washington on March 10, 2023. Drew Angerer/Getty Images
House Ways and Means Committee Chairman Jason Smith (R-Mo.) has criticized the IRS for failing to provide essential information in its much-anticipated report released on April 6.
The tax agency unveiled its strategic operating plan in the report, disclosing how it plans to use the $80 billion in new funding provided by the Democrats’ Inflation Reduction Act. The new cash infusion will be used to hire thousands of new employees, improve tax enforcement and customer service, and audit wealthy taxpayers and corporations.
“Americans are rightly concerned the IRS will use its $80 billion pay raise to go after the middle class, and today’s announcement does nothing to ease those concerns. The American people deserve to know how their hard-earned taxpayer dollars are being spent,” Smith said in a statement.
“The IRS’s latest document offers no specifics for the agency over the next decade. If this is a ‘plan,’ why does it omit how many employees the agency seeks to hire over ten years, fail to identify target audit rates for taxpayers, and lack specific details about how the money will be spent beyond the next two years?” he added.
The IRS, which had 78,661 full-time equivalent (FTE) employees in the fiscal year 2021, said in the report that it plans to hire nearly 30,000 new FTE employees during the 2023 and 2024 fiscal years, including 8,782 hires in enforcement and 13,883 in taxpayer service.
However, the report did not provide hiring estimates beyond those years. The IRS added that its operating plan will be updated annually and that it will adjust its hiring plan.
‘More Questions Than Answers’
Smith also questioned why the Biden administration would seek billions more in funding for the IRS for the fiscal year 2024.
“The $80 billion raise is just the start,” Smith said. “The Biden Administration had the nerve to ask Congress to give the IRS another $43 billion in its annual budget request while withholding details on how it will spend the new money.”
According to the congressman, the administration’s $6.9 trillion budget proposal for fiscal year 2024 includes a $14.1 billion IRS annual budget for the year—which is 15 percent higher than the 2023 level—and an additional $29.1 billion in mandatory funding for enforcement and operations.
As a result, Smith questioned whether the agency had actually presented a “plan” in its report at all.
“This is a punt, not a ‘plan,’ and it raises more questions than answers about how Americans’ tax dollars will be spent to go after working families and small businesses,” he said.
Sen. John Thune (R-S.D.) speaks after a Republican policy luncheon at the U.S. Capitol in Washington on March 28, 2023. Kevin Dietsch/Getty Images
Sen. John Thune (R-S.D.), the ranking member of the Finance Committee’s Subcommittee on Taxation and IRS Oversight, also criticized the report as failing to answer some questions.
“It has no detailed spending breakdown, no oversight mechanism, and no answers to other important questions,” Thune wrote on Twitter. “The IRS Funding Accountability Act, which I led with my Republican colleagues, would fix that.”
The IRS Funding Accountability Act, which was introduced in the Senate (S.338) and House (H.R.888) in February, would require the IRS to provide Congress with its quarterly updates and plans, and the agency would face financing penalties if it failed to do so, according to a press release on the legislation’s introduction.
‘A Fair Tax System’
Democrats on the House Ways and Means Committee welcomed the IRS report.
“Soon, thanks to Democratic investment, the IRS will be better equipped to hold tax cheats accountable, recover taxes owed, and reduce the tax gap,” said ranking member of the committee Rep. Richard Neal (D-Mass.), according to a statement.
(L-R) Committee chairman Rep. Jason Smith (R-Mo.) speaks with ranking member Rep. Richard Neal (D-Mass.) during a House Ways and Means Committee hearing on Capitol Hill in Washington on March 10, 2023. Drew Angerer/Getty Images
Rep. Bill Pascrell (D-N.J.), ranking member of the Ways and Means Subcommittee on Oversight, praised Treasury Secretary Janet Yellen and IRS Commissioner Danny Werfel for their effort in putting the report together.
“But we have a long way to go in building a fair tax system that works for all Americans,” Pascrell said in a statement. “I am grateful for the leadership of Secretary Yellen and Commissioner Werfel in developing this aggressive plan to make tax administration in America better and ensure the 1 percent and corporations pay their fair share without clever abuses and avoidance.
“As we approach the end of another tax season, I will continue to be relentless in my efforts to support dedicated IRS employees and bring an end to our nation’s two-tier tax system.”
On April 6, Werfel assured American taxpayers who make less than $400,000 that they won’t see more audits.
“People who get W-2s or Social Security payments or have a small business should not be worried about a sudden new wave of IRS audits,” Werfel told reporters on Thursday. “Our focus will be on other high dollar areas for quite some time because there’s a lot of work to do in those more complex areas of tax law that will take years to accomplish.”
‘Lacks Key Details’
The National Taxpayers Union Foundation (NTUF), a nonprofit organization dedicated to tax policy research and education at all levels of government, also said the IRS report left out some essential details.
“The Plan unfortunately lacks key details that are critical to taxpayers and their advocates, such as specific quantitative goals for improved service, how the IRS will better measure and assess the tax gap, and how the IRS will square its expanded enforcement objectives with taxpayer rights and due process,” NTUF President Pete Sepp said in a statement.
Sepp also urged the IRS to “exercise caution” with its additional enforcement funds.
“Reducing the tax gap remains an important public policy mission, but doing so in a way that disregards taxpayer rights and due process—or ensnared innocent taxpayers or those who made honest mistakes—would result in more harm than good, further eroding public trust in the IRS,” he explained.
In February, Sepp voiced the NTUF’s support for the IRS Funding Accountability Act, since it would provide Congress with effective oversight of the tax agency.
Frank Fang
journalist
Frank Fang is a Taiwan-based journalist. He covers U.S., China, and Taiwan news. He holds a master's degree in materials science from Tsinghua University in Taiwan.
