Treasury Secretary Janet Yellen at a July 14 news conference.
Done Nagi | Reuters
The memo also outlines how the nearly $80 billion in funding provides a “monumental opportunity” to transform the IRS, outlining four priorities.
1. Clear the backlog
With millions of unprocessed tax returns, Yellen aims to “completely resolve” the agency’s backlog, the memo says. Rettig in March pledged to eliminate pileups by the end of 2022and as of August 5, there were 9.7 million unprocessed individual tax returns for 2021, according to the tax authorities.
2. Improve customer service
Yellen also insisted on making “meaningful improvements” to taxpayer service. While the agency only answered 11% of phone calls in fiscal year 2021, reported taxpayer advocate, the IRS recently leveraged technology to make improvements.
3. Overhaul of the agency’s technological systems
Another priority is an “overhaul” of the agency’s technology systems, which the memo describes as “decades outdated.”
“The two IRS systems containing the official records of individual and business taxpayer accounts are the oldest major technology systems in the federal government,” wrote National Taxpayer Advocate Erin Collins in her January report in Congress.
4. Hire IRS employees to replace retiring workers
Yellen also prioritized the hiring of IRS employees, with the goal of replacing the 50,000 IRS employees who are expected to retire over the next five years.
In fiscal year 2021, the IRS workforce consisted of 78,661 full-time employees, a decrease of 12.9% since 2012, depending on the agency.
“This operational plan is critical to ensuring the public and Congress are able to hold the agency accountable as it pursues needed improvements,” Yellen added.
The $80 billion funding from the IRS has been controversial. While critics have argued that the new resources could trigger an increase in audits beyond wealthy taxpayers, Yellen responded to those claims in a letter to Rettig August 10.
“Specifically, I direct that any additional resources – including any new staff or auditors hired – not be used to increase the share of small businesses or households below the $400,000 threshold that are audited against the historic levels,” she wrote.
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