Early this year, National Taxpayer Advocate Erin M. Collins told Congress that she had begun to see progress at the Internal Revenue Service. “We have begun to see light at the end of the tunnel. I am just not sure how much further we need to travel before we see sunlight,” she wrote in an annual report released on January 11.
Now, The Washington Post’s Jacob Bogage reports that, thanks to a funding boost, the long-beleaguered tax agency is reaching “a once-unimaginable position.” It’s … functioning: “The IRS is answering 90 percent of its phone calls, has squashed its backlog of overdue returns, introduced new online taxpayer tools to keep pace with private software companies and processed 99.7 percent of returns filed this tax season, according to agency reports.”
Bogage reports that the IRS has used nearly $850 million in funding from last year’s Inflation Reduction Act, the law passed by Democrats and assailed by Republicans for providing the tax agency an additional $80 billion over 10 years. As their first piece of legislation, House Republicans voted to repeal most of that funding, though the bill isn’t likely to go any further.
While the political sniping over the new law continued, the IRS says it has hired more than 5,000 employees, mostly to answer taxpayer phone calls and staff tax clinics. It reportedly posted another 5,300 job openings last month.
In all, Bogage reports, the agency has used $847.6 million in new funding, including $426 million for taxpayer services and about $315 million for “operations support, training new employees and preparing software systems for changes in tax laws.” About $100 million has gone toward modernizing business systems. Just $6.6 million so far has been spent on tax enforcement, the most controversial part of the funding.
The bottom line: The IRS is on track for a “normal” tax season, which certainly hasn’t been the norm in recent years.
“I think they understand a disastrous filing season would be catastrophic,” Mark Mazur, a former assistant Treasury secretary for tax policy in the Biden administration, tells the Post. “That would basically mean, ‘We gave you money — you did such a bad job spending it, we’re taking it back.’”