IRS chief confident tax experts will make the 'financial sacrifice' necessary to work for his agency
The commissioner on Tuesday defended his implementation of new funds to skeptical Republicans.
The unprecedented investment into the Internal Revenue Service is working exactly as intended, the head of the agency told lawmakers on Tuesday, though Republican lawmakers continue to meet the key Biden initiative with significant skepticism.
IRS is dramatically improving its customer service for taxpayers and starting to realize returns on its boosted enforcement of high-earning individuals and corporations, IRS Commissioner Danny Werfel told members of the House Oversight and Accountability Committee, citing the billions of dollars that have so far been infused to the agency thanks to the Inflation Reduction Act.
While IRS’ answer rate at its call centers has skyrocketed and dozens of Taxpayer Assistance Centers have reopened after hiring surges aimed at taxpayer services, Republicans on the Government Operations and the Federal Workforce and Health Care and Financial Services subcommittees, which jointly held the hearing, said their constituents were still waiting too long for assistance. They also expressed doubt IRS would deliver on its promise to not increase audits on those making less than $400,000 per year, promising to hold Werfel accountable.
“My colleagues on the other side of the aisle believe more money and more power is the solution," said Rep. Lisa McCalin, R-Calif., noting the Democrats' signature tax and climate law "dumped" $80 billion into IRS accounts. "The IRS needs stronger leadership, not more money and not more audits."
After the hearing, Werfel said he would continue to focus on three areas to convince lawmakers his transformation of IRS was working: improving customer service, boosting enforcement of high-earning tax cheats and reducing tax scams.
Werfel said he hopes to “choose the right priorities that will resonate with the American taxpayer as good things to be doing, and I hope that that would kind of cut through some of the pushback that we're getting.”
IRS has realized some initial success in cracking down on individuals not paying what they owe in taxes. After previously announcing the agency is using IRA funds to target 1,600 millionaires it has identified as owing at least $250,000 in taxes each, Werfel told lawmakers it has already collected $160 million from the initiative. Those efforts are just ramping up and IRS currently has openings posted for 3,700 enforcement personnel.
Werfel said IRS is “getting the resumes and interviewing them getting ready to onboard them,” but will not know if the agency is on track to meet its goals until early next year. In the meantime, he said, IRS will deploy a variety of recruitment strategies to entice employees with significant private sector experience to work in government.
“There are people in the private sector today that are inspired, that have always thought about doing government work,” Werfel said. “It is a financial sacrifice to go from a big law firm to a government job, but we see it time and time again.” He added the transition is “not for everyone,” but he is confident there are “a lot of people out there that if we can connect with them will come.”
Werfel noted IRS has hired about 300 lawyers in recent months, demonstrating IRS is “making those types of connections.” He added some late-career individuals may want to “give back” in the final years of their working lives.
“It's part of our responsibility to make sure that we are making the case for the type of impact that you can have at this historic moment for the IRS,” Werfel said.
IRS still has a ways to go to meet its target. Despite its new funding, revenue agent staffing has actually decreased by 8%, or more than 650 employees, between the end of fiscal 2019 and March 2023, according to a recent inspector general report. IRS had planned to bring on 3,833 revenue agents in fiscal 2023, but as of March officials had recruited just 34.
At Tuesday’s hearing, Werfel’s efforts won at least some bipartisan support, albeit tenuous. Rep. Pete Sessions, R-Texas, said he wanted to continue to engage with the commissioner on how the agency will deploy its new funding and “how that’s going to aid and do the things that would be necessary.”
“We need to make sure the IRS in its performance does its job,” Sessions said. “We need to make sure they are properly funded.”
House Republicans previously voted to repeal the IRS funds with the Inflation Reduction Act and have since successfully gotten $20 billion of the spending rescinded as part of the debt ceiling deal President Biden signed into law earlier this year. Its funding for fiscal 2024 remains uncertain as Congress continues to negotiate over full-year funding.