Republicans Grill IRS Chief Over ‘Dysfunction,’ Democrats Cry Hypocrisy

Internal Revenue Service (IRS) commissioner nominee Daniel Werfel testifies before the Senate Finance Committee during his nomination hearing in Washington on Feb. 15, 2023. Kevin Dietsch/Getty Images

Republicans on the House Oversight and Accountability Committee took IRS Commissioner Daniel Werfel to task on Oct. 24 for his agency’s ongoing “dysfunction” despite billions in new funding.

“The dysfunction is across the board, from data breaches, leaks, and identity theft to slow audits, backlogs, and really horrific customer service,” noted Rep. Lisa McClain (R-Mich.) at a joint subcommittee hearing.

Ms. McClain, who chairs the subcommittee on Health Care and Financial Services, noted that the Inflation Reduction Act (IRA) gifted the IRS with an $80 billion funding boost over a 10-year span—an amount eventually cut down to roughly $60 billion by the Fiscal Responsibility Act.

“This funding spree prioritizes enforcement over improving taxpayer services,” she said, pointing out that most of the funding was allocated for enforcement.

The congresswoman noted that call wait times had been of particular concern to her constituents, some of whom have been trying for months to get in touch with the IRS to no avail.

Revealing that she had even experienced the same problem, she asserted: “If a private business did what the IRS does on a daily basis, it would quickly go out of business.”

Mr. Werfel, however, said that during the past tax season, the agency’s overall performance had “tremendously” improved due to the IRA funding.

“Specifically, we were able to immediately hire 5,000 new customer service representatives and put them on the phones,” he said.

“So, for those that called during filing season—and that’s the end of January to mid-April—we were able to answer 87 percent of those calls with a three-minute wait time.”

He added that the IRS’s modernization plans would likely help to improve those services even more, though Ms. McClain again stressed that a comparatively small portion of the new funding had been allocated for that purpose.

Other Complaints

Another concern raised by Rep. Gary Palmer (R-Ala.) was the IRS’s new $600 reporting threshold for payment app transactions.

“I know you keep talking about going after millionaires and billionaires, but you’re also going after Taylor Swift fans who sold their tickets for over $600,” he said.

The previous threshold—prior to 2023—only targeted those who received at least $20,000 and had more than 200 transactions in one year. The new rule, implemented under the American Rescue Plan Act of 2021, has no specified threshold for the number of transactions.

“It’s not just millionaires and billionaires, you’re also going after auditing small businesses and others,” Mr. Palmer added, rebuking the commissioner for trying to “audit our way out of the tax gap.”

The congressman also noted that the IRS was recently accused of backdating penalty approvals and asked Mr. Werfel whether the personnel responsible would be fired.

“Keeping in mind the severity of the penalties that are imposed on private citizens, the least that anybody can expect is that someone be dismissed from their job,” Mr. Palmer said.

Mr. Werfel replied that the agency was “taking all the right steps” to correct the situation but would not comment on whether those responsible would be fired.

Democrats Push Back

While Republicans grilled the commissioner over the IRS’s shortcomings, Democrats touted the agency’s year-over-year improvements as a win for the IRA.

“The IRS answered 6.5 million more calls than last year, cutting the wait times down by 86 percent, which I think is phenomenal,” Rep. Kweisi Mfume (D-Md.) noted.

“It served more than 140,000 additional taxpayers and cleared the backlog of unprocessed 2022 individual tax returns with no errors. Now, you’ve got to be doing something right to have those kinds of numbers that are certifiable and verifiable.”

Meanwhile, Rep. Jamie Raskin (D-Md.), the top Democrat on the Oversight Committee, slammed his Republican colleagues for their remarks considering their ongoing struggles to elect a speaker.

“One can only regard with amazement that any member of the Republican party today would lecture the commissioner of the IRS about efficiency or organization or anything else looking at what the Republicans are saying about the Republicans today on Capitol Hill, as we live through all of the reverberations of the Chaos Caucus,” he said.

Rattling off Republican members’ critiques of the chaos within their own party, he added, “It would be great if we could actually get a speaker of the House and a functioning House of Representatives so we could deal with these issues.”

That view was shared by Rep. Katie Porter (D-Calif.), who accused “opportunistic Republicans” of weakening Congress with their infighting.

The hearing followed House Republicans’ election of Rep. Tom Emmer (R-Minn.) as their third nominee for speaker. But that result was short-lived as, lacking the necessary support, he later withdrew his name from contention.

The slate of other candidates for the position includes Reps. Byron Donalds (R-Fla.), Chuck Fleischmann (R-Tenn.), Mark Green (R-Tenn.), Kevin Hern (R-Okla.), Mike Johnson (R-La.), and Roger Williams (R-Texas).