IRS Funding Boost to Revolutionize Enforcement and Taxpayer Service
The IRS will receive a $60 billion funding boost from the Inflation Reduction Act to improve enforcement and customer service. This IRS funding will address staffing shortages, emphasize technology-driven enforcement, and enhance the taxpayer experience through digital tools and data analytics.
Key Details in the IRS Funding Boost
The Internal Revenue Service (IRS) is set to receive a significant funding boost through the Inflation Reduction Act, signed into law by President Joe Biden in 2022. Originally earmarked for around $80 billion over the next decade, the IRS funding has been scaled back to $60 billion but remains substantial, given that the IRS historically operated on an annual budget of approximately $14 billion.
According to the reports, this IRS funding infusion primarily aims to enhance IRS enforcement and improve customer service for taxpayers. While concerns have arisen about the possibility of hiring tens of thousands of new IRS agents, it’s important to note that the agency had experienced a 22% staffing reduction between 2010 and 2021, and many new hires will serve to replace retiring personnel.
IRS Funding Empowers Tech-Driven Enforcement Strategy
The IRS’s strategic approach to enforcement emphasizes technology and data advances to target taxpayers attempting to evade taxes, rather than those genuinely trying to fulfill their obligations. This technological push includes the use of data analytics and data scientists for audits, as well as various online tools and digital scanning programs to streamline processes.
However, the IRS faces challenges due to its outdated computer system, hindering its technological agility and customer service. To improve enforcement, the IRS leverages three main sources of data: past tax returns, publicly available data (including social media), and third-party data, often purchased to detect underreporting.
With increased IRS funding, the IRS plans to enhance the taxpayer experience using technology, including chatbots, online portals, and real-time processing. These innovations aim to reduce the time taxpayers spend corresponding with the IRS and facilitate compliance. Ultimately, the IRS funding is to leverage technology to make tax payments smoother for law-abiding citizens while increasing revenue collection for government programs.