WASHINGTON — The Internal Revenue Service on Thursday detailed its plan to spend $80 billion in additional funding that Democrats approved last year as part of their climate change and health care package.
The plan says the agency will boost tax enforcement by increasing its “focus on segments of taxpayers with complex issues and complex returns where audit rates are minimal today, such as those related to large partnerships, large corporations, and high-income and high-wealth individuals.”
The 10-year outlook from the IRS shows nearly $46 billion would go to enforcement activities, with another $25 billion spent on operations support. The proposal would dedicate $5 billion to business systems modernization, $3.2 billion to taxpayer services and $500 million to clean energy.
The 150-page detailed proposal shows the IRS plans to hire more than 10,000 people during the current fiscal year with the vast majority of those hires, about 7,400, going to taxpayer services. The remaining 1,500 would go to enforcement, with about 700 going to operations support and 350 to business systems modernization.
During fiscal 2024, slated to begin on Oct. 1, the IRS plans to hire an additional 20,000 full-time employees. About 7,200 would work in enforcement; 6,500 would work in taxpayer services; 3,800 would be in operations support; 1,800 in energy security; and just under 200 in business systems modernization.
IRS Commissioner Danny Werfel said in a statement accompanying the report the “plan is a bold look at what the future can look like for taxpayers and the IRS.”
“Now that we have long-term funding, the IRS has an opportunity to transform its operations and provide the service people deserve,” Werfel added. “Through both service and technology enhancements, the experience of the future will look and feel much different from the IRS of today.”
Congress approved the legislation that provided the $80 billion in additional IRS funding in August amid a wave of objections from Republicans who said it would subject taxpayers to increased audits.
Democrats argued during debate on the package the additional funding would not go toward increasing audits on people making less than $400,000.
The U.S. Treasury Department reinforced that pledge Thursday, writing the IRS plan “will not be used to raise audit rates for small businesses and households making less than $400,000 a year, relative to historical levels.”
Treasury Secretary Janet Yellen said the IRS plan “shows how the IRS will continue this transformation by providing world-class service, upgrading decades-old technology, and reducing the tax gap by ensuring high earners play by the same rules as working and middle-class families.”
Maryland Democratic Sen. Chris Van Hollen, chair of the panel in charge of the annual IRS funding bill, said the plan will allow the IRS “to dramatically improve customer service and efficiency for taxpayers who have struggled with its outdated systems.”
“For too long the IRS has lacked the tools it needs to go after rich tax cheats and those billion-dollar corporations that have used various schemes to hide their wealth and fail to pay what they already owe,” Van Hollen said. “It’s time that these corporations and individuals paid the taxes that are due rather than have the rest of the country pick up the tab.”
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