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IRS Commissioner Defends Agency’s Budget in Congressional Hearing

S.J. Steinhardt
Published Date:
Apr 28, 2023

IRS Commissioner Daniel Werfel defended his agency’s budget in testimony before the U.S. House of Representatives’ Committee on Ways and Means, a day after the Republican-controlled chamber passed a bill to strip the agency of the $80 billion in funding allocated to it by the Inflation Reduction Act, Accounting Today reported.

The legislation, which aimed to cut spending in return for a vote to increase the federal debt limit, would eliminate most of the IRS's increased funding dedicated to ramping up enforcement, among other cuts.

Werfel credited the Inflation Reduction Act funding with allowing the agency “to make improvements in many areas, including our levels of service on the phones and in person during the 2023 filing season,” he said in his prepared statement. “In tandem with the IRS’ annual discretionary budget, this critical, sustained multi-year funding will allow the agency to transform its operation—through improved taxpayer service, smarter enforcement, upgraded technology, and better data security.”

"When we had lower resources, it was so frustrating for IRS employees, not just because we couldn't have the right amount of people on the phone, but also we couldn't do what we need to do as part of meeting taxpayers where they are and serving them effectively in underserved populations," Werfel said, according to Accounting Today. "What funding allows us to do is the base of what we're supposed to do, to be there to answer the phone, but it [also] allows us to lean in and provide a more fulsome service experience. That means meeting taxpayers where they are, allowing them if they want to walk into a walk-in center that is open, staffed and there's no line outside."

Rep. Mike Thompson, (D-Calif.) disputed that assertion, Accounting Today reported, saying that his wife spent three hours on three attempted calls to the IRS last week without reaching a customer service representative. Other lawmakers said their constituents are still complaining about their difficulties, according to Accounting Today.

Despite the passage of the House bill, the IRS is likely to keep the extra funding, Bill Smith, national director of tax technical services at CBIZ MHM's national tax office in Washington, told Accounting Today. "I think the pullback on the funding is extremely unlikely to nonexistent, and the same with the energy credits," he said. "The House went Republican in the election, but the Senate went further Democratic. Even if it passes, they can't override a veto. And obviously, it would get vetoed."

“We now have a better sense of what the IRS is going to do with the $80 billion, so I don't see the $80 billion going away," he continued. "I think there'll be some hustling in the budget talks over it, and maybe they get some concessions somewhere else. But I think it's here to stay, at least for the near term."

Werfel also pushed back against allegations that the agency would use part of the extra funding to hire armed auditors, Reuters reported. He acknowledged that the IRS Criminal Investigations (IRS-CI) division would hire additional staff authorized to carry firearms, but he emphasized that IRS-CI does not conduct audits.

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