Source: Politics<\/p>\n
The IRS released a much-anticipated report<\/a> on Thursday outlining how it will spend new funding on ambitious hiring plans and increased enforcement aimed at wealthy taxpayers and big corporations \u2014 but left a long list of questions unanswered, which is bound to aggravate lawmakers.<\/p>\n The report describes the agency\u2019s objectives for the $80 billion cash infusion that was provided by Democrats\u2019 Inflation Reduction Act<\/a>, including plans to create \u201cworld-class\u201d customer service for taxpayers seeking assistance; develop data management systems so IRS employees can have a 360-degree view of a taxpayers\u2019 information; and hire specialized lawyers and accountants<\/a>who can help audit the most complex corporate and partnership returns.<\/p>\n Democratic lawmakers and newly appointed IRS Commissioner Danny Werfel say the agency\u2019s transformation will help bring in an estimated half-trillion dollars that the government misses out on every year due to tax evasion<\/a>, all the while making it much easier for Americans to file their taxes every year. Republicans fiercely oppose the expansion, contending the agency will unleash an army of auditors against average Americans and small businesses.<\/p>\n But the vaguely worded report, which was delivered more than a month later than the deadline Treasury Secretary Janet Yellen set, answered few of the questions that lawmakers have been lobbing at Yellen and IRS officials for months about specific budget forecasts and department hiring.<\/p>\n The IRS, which counted around 78,700 employees in 2021, says in the report that it plans to bring on nearly 30,000 new employees by the end of fiscal year 2025. That would include 8,782 hires in enforcement and 13,883 in taxpayer services and surely offset some attrition in the agency’s ranks from retirements. <\/p>\n The agency intends to spend $2.8 billion of the funding in 2023 and $5.4 billion in 2024 and, over a 10-year period, allot a hefty sum of $41.7 billion alone to scrutinizing the most sophisticated, high-income taxpayers.<\/p>\n However, the IRS did not provide essential information sought by lawmakers on the Senate Finance and House Ways and Means committees, such as how many employees the agency would like to hire long term for enforcement; how exactly the IRS will comply with a pledge by Yellen not to increase audits on those making less than $400,000; and what the agency forecasts to spend on operations, enforcement and customer service from fiscal years 2025 through 2031.<\/p>\n Treasury Deputy Secretary Wally Adeyemo defended the limited budget forecast in a call with reporters Thursday, saying technology advancements such as digital scanning of paper returns and automated phone services will improve agency productivity. That creates uncertainty around how many employees the IRS will ultimately need to hire, Adeyemo said.<\/p>\n \u201cI hope that we can get better at forecasting, but I just think it\u2019s good management and leadership practice\u201d to refrain from projecting beyond fiscal year 2024, Werfel added.<\/p>\n Still, those omissions could be no coincidence with Republicans primed to pounce on any details of the IRS\u2019 bulked-up enforcement. When Treasury first asked for new money for the IRS, the department specified exactly how many workers<\/a> the IRS would hire to crack down on tax cheats: 86,852.<\/p>\n Republicans have been using that figure ever since as grist for attack ads on Democrats<\/a>.<\/p>\n Democrats have fired back that the agency has been starved of resources to fairly enforce the tax code \u2014 with audit rates for millionaires and corporations falling by 77 percent and 44 percent, respectively, from 2010 to 2017 \u2014 and that much of the new hiring is needed to replace the two-thirds of the IRS workforce that will be eligible to retire in the next six years.<\/p>\n Here\u2019s a look at what the report says about key elements of the IRS strategy:<\/p>\n ENFORCEMENT<\/p>\n The agency says it wants to leverage data analytics and technology to audit complex tax returns and plans on hiring the first waves of specialists focused on big companies, partnerships and high-income individuals in fiscal year 2023. The IRS will increase enforcement activities on cryptocurrencies and in areas where audits have declined significantly over the years, such as in estate, gift and employment taxation.<\/p>\n That will involve increasing staff in the Office of Chief Counsel, the legal adviser to the IRS based at the Treasury Department, to help litigate cases and issue clear guidance on tax laws. The agency insists ramped-up enforcement will apply to only those making more than $400,000.<\/p>\n \u201cPeople who get W-2s or Social Security payments or have a small business should not be worried about some new wave of IRS audits. We\u2019re taking that off the table,\u201d Werfel said.<\/p>\n