Although I’ve been aware of the April 18 deadline for my taxes for several months, I’ve been preoccupied with changing tax preparers, work obligations, and the pandemic, not to mention the complexity of my tax return. This situation reminds me of the IRS‘s recent announcement that it failed to meet its February deadline to create a business plan for the $80 billion in new funding granted by Congress last year.
Last August, Treasury Secretary Janet Yellen instructed the IRS to develop a plan by February 17. However, on February 16, six months later, the IRS acknowledged that it was not yet prepared. Instead, the agency issued a statement indicating that it “anticipates delivering the plan to the Secretary in the coming weeks.”
Will the cherry blossoms bloom before the plan is completed?
According to a senior Treasury official, the plan is expected to be finished “this spring.” During his confirmation hearing, Daniel Werfel, President Biden’s nominee for IRS commissioner, pledged to share the report with Congress and the public as soon as it is completed. However, the IRS and the Treasury have not disclosed the manner in which the report will be shared.
To be fair, the IRS has already started using some of the new funds. In August, Treasury Secretary Yellen authorized the use of funds for improving services in preparation for the 2023 filing season. As a result, the IRS was able to hire 5,000 new staff members to assist with telephone inquiries and other duties.
While this is a positive step, the agency still requires a comprehensive plan for the remaining funds
There are several reasons for the delay. When Yellen established the deadline, the commissioner at the time, Charles Rettig, left when his term ended in November. Additionally, the Biden administration took time to nominate Daniel Werfel as his successor, and the Senate Finance Committee only held Werfel’s confirmation hearing on February 15. Furthermore, the Senate has yet to approve Werfel’s nomination. It is also worth noting that Werfel will be accountable for administering the plan, at least during the first few years, so he should have input on its development.
The spending plan could be the most significant report produced by the IRS during the remainder of the Biden Administration, as it will largely determine the agency’s credibility with Congress and the public. The IRS has been granted $80 billion to spend over the next ten years, which is a substantial sum even in the realm of federal budgets.
While it is understandable that the IRS and Treasury want to ensure accuracy, the delay in completing the plan may result in a sluggish implementation process. Additionally, the longer the delay, the more time urban myths will persist, including the unfounded claim that the IRS will use the funds to hire 87,000 revenue agents.
It is important to note that since last summer, the Treasury has been extensively involved in drafting the document. Treasury Secretary Yellen appointed her most senior aide, Deputy Secretary Wally Adeyemo, to collaborate with the IRS in developing specific initiatives and timelines. As a result, Yellen’s staff will not be presented with an unexpected set of recommendations.
An unexpected postponement
Furthermore, it is important to note that the IRS’s plan is not set in stone. Regardless of the initial plan, it is likely that revisions will be made as the agency’s requirements change. The priority at present is to present a document that will help persuade Congress and the public that the agency has a trustworthy strategy for using these significant new funds and to begin implementing the necessary changes.
The delay is particularly unexpected given that the IRS was aware for years that new funds could be on the way. Presidential candidate Joe Biden proposed increased funding for the IRS as early as 2020, and the money was included in Biden’s initial budget in May 2021.
The IRS could have started creating a strategic plan for improving enforcement, taxpayer service, information technology, and other areas as soon as Biden was elected. Indeed, if the IRS were a corporation, it would have devised a plan before requesting funding. It is logical for any organization to first determine what it needs to accomplish before calculating the cost of those initiatives.
A just exchange
However, in Washington, the IRS operates differently from a business. Nonetheless, the agency’s requirements are no secret as one can easily access reports from the Taxpayer Advocate Service or the annual data book to determine which areas need improvement. Personally, if I were promised a large sum of money, be it $80 billion or even $80,000, and all I had to do was present a plan by a certain date, I would certainly ensure I meet the deadline.
Considering the delay by the IRS or perhaps the Treasury, it would only be equitable for the agency to waive penalties and interests if I miss my filing deadline this spring. I eagerly await it.