Yellen eyes $80B boost as ‘monumental opportunity’ to ‘transform’ IRS

Treasury Secretary Janet Yellen is seen during a House Ways and Means Committee hearing to examine the President’s FY 2023 budget on Wednesday, June 8, 2022.

Greg Nash Treasury Secretary Janet Yellen is seen during a House Ways and Means Committee hearing to examine the President’s FY 2023 budget on Wednesday, June 8, 2022.

Treasury Secretary Janet Yellen is preparing the IRS for an overhaul of the U.S. tax collection system made possible by an $80 billion funding boost for the agency included in Democrats’ Inflation Reduction Act.

In a Wednesday memo from Yellen to IRS Commissioner Charles Rettig obtained by The Hill, Yellen said she’s giving the IRS six months to deliver an in-depth operational plan to figure out exactly how that $80 billion should be spent.

  • Many Democrats have long viewed the IRS as chronically underfunded, but the $80 billion allocated to the agency has Republicans fuming. GOP lawmakers argue that the funding will be used to hire tens of thousands more IRS agents and will result in increased tax audits on those making $400,000 or less.
  • However, Yellen has previously stated that the money should not be used to conduct additional tax audits on Americans below this threshold. In the memo, Yellen stressed again that “these investments will not result in households earning $400,000 per year or less or small businesses seeing an increase in the chances that they are audited relative to historical levels.”
  • Still, Republicans pointed to a May 2021 Treasury report that found that a funding boost comparable to the one in the IRA could allow the Treasury to hire 86,852 new full-time employees, and have claimed that audits would increase on the middle class.

In interviews with The Hill, law enforcement agents from the IRS criminal investigation division also pushed back against this characterization of the IRS’s work, saying that “the bulk of IRS’s tax administration work is done by civilian auditors and revenue collectors.”

However many new civilian auditors are going to be hired, the IRS is anticipating a wave of upcoming retirements at the agency. In her memo Yellen said it was a priority “to replace the attrition that is on the horizon from the expected retirement of at least 50,000 IRS employees over the next five years.”

The Hill’s Tobias Burns has the deets here.

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