The IRS will begin the 2023 tax season bogged down in 10 million unprocessed tax returns from prior years and struggling to answer taxpayer phone calls, putting the embattled tax agency in a fraught position as Republicans try to gut its funding.
The Treasury Department says that the troubles at the IRS are the result of years of underfunding.
The watchdog report offered optimism that the $80 billion in additional funding that was allocated from the Inflation Reduction Act last year meant that improvements lay ahead.“We have begun to see light at the end of the tunnel,” Erin M. Collins, the taxpayer advocate, wrote in the report. “I am just not sure how much further we need to travel before we see sunlight.”
The Biden administration’s overhaul of the IRS is central to its plan to narrow the $7 trillion tax gap — payments that individuals and businesses owe but that are expected to go uncollected over the next decade. Republicans have seized on plans to hire 87,000 new employees to conduct more audits and expand customer service and accused President Joe Biden of creating a “shadow army” to target conservatives.
The Treasury Department said the troubles at the IRS were the result of years of underfunding and that the lack of investment had led to a loss of talent at the agency. As a result, the IRS audits nearly 80% fewer millionaires than it did 10 years ago. Treasury said that families that had questions about their refunds or tax credits were suffering through delays.
The report included several recommendations for improving the IRS, including upgrades to its website, clearer communication about processing delays and a streamlined hiring process to more efficiently bring on and train new staff.
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