Treasury Secretary Janet Yellen mounted a robust defense today of how the Internal Revenue Service (IRS) is already benefiting from an influx of funding from Congress under legislation approved last year, and why the money is necessary for longer-term improvements.

Last year’s Inflation Reduction Act provided $80 billion of new funding over ten years for the IRS. The funding aims in part to help modernize the agency’s business systems, including nearly $5 billion to hasten work on the agency’s three-year-old IT modernization plan, which had already received $275 million from the fiscal year (FY) 2022 budget and a one-time shot of $1 billion under the American Rescue Plan Act in 2021.

At a Senate Finance Committee hearing today, Ranking Member Mike Crapo, R-Idaho, blasted the Biden administration’s FY2024 budget request for IRS, and what he faulted as a lack of planning by the Treasury and on how to best spend funding approved last year for IRS.

The FY2024 budget request, the senator said, “doubles down on the $80 billion already given to the IRS, including two more additional years of plus-up funding totaling $29.1 billion solely for enforcement and compliance initiatives,” the senator said. “In addition to $14.1 billion more of yearly funding, that’s another $43 billion.

“In the meantime, the IRS has embarked on a spend-first plan-later approach that is not transparent or responsible and is a surefire recipe for error, waste and mismanagement,” the senator said. “While we may not have the details yet, we do know that only 6 percent of this existing plus-up for funding is for modernization,” he said, asserting that “well over 62 percent is solely for hiring,” and of that total, 93 percent of that for enforcement hiring.

In response, Yellen pointed to stats she said show that IRS is improving customer service with help from last year’s funding.

“Our new resources for the IRS are already paying off,” she said. “Taxpayers are getting drastically improved customer service this year. For example, we’ve answered hundreds of thousands more phone calls during this filing season than this time last year.”

“Our proposed budget builds on our economic progress by making smart, fiscally responsible investments,” Yellen said.

The Treasury Secretary told senators that critical parts of the IRS strategic operating plan “should be completed in the coming weeks. It has been a priority since day one.” She added,

“I promised during the tax season that there would be 85 percent customer service performance, and so far we’ve been in that range.”

Sen. Tom Carper, D-Del., said that “taxpayers are already reaping the rewards  of this funding.” He cited statistics that say the IRS is answering 90 percent of taxpayer phone calls in the current tax filing season, down from a rate of 13 percent last year.

“That’s not perfect, but it’s one heck of a lot better than it was,” the senator said. “These investments will ensure that the IRS can modernize … technology and their workforce to meet the needs of everyday taxpayers while improving the fairness of our tax system.”

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John Curran
John Curran
John Curran is MeriTalk's Managing Editor covering the intersection of government and technology.