A strategic operating plan outlining the allocation of $80 billion in additional funding over the next ten years has been released by the IRS. Let’s take a closer look at what the plan covers, as well as what it doesn’t cover. As you browse through the IRS’s “ambitious effort” to revolutionize the agency and enhance taxpayer and national service for the upcoming ten years, it’s useful to be aware of the plan’s omissions.
Notably absent is the infamous 87,000 agents figure that never existed. Interestingly, the report provides very few numerical details, which may be a deliberate choice by the newly appointed IRS Commissioner, Danny Werfel, who emphasizes the importance of producing results rather than dollars. The plan does not feature any flashy new acquisitions.
What Has Been Excluded in the IRS Spending Plan?
Typically, when spending plans are introduced, they are accompanied by the promotion of a specific investment – whether it’s a new piece of equipment, a fresh logo, or a state-of-the-art building – intended to signify transformation. However, you will not discover anything of the sort in this plan. Although there are proposals to recruit more staff and upgrade technology, the plan does not prioritize any particular investment as a transformative element.
The plan does not involve any expenditure reallocation. Despite objections from some interested parties, such as the AICPA, regarding the amount of funding directed towards enforcement, the current Commissioner lacks the authority to alter it; only Congress holds that power. Moreover, not all of the funds are subject to discretion. The Inflation Reduction Act contains explicit provisions for enforcement, technology, and service, which cannot be altered by the IRS alone.
The IRS can articulate its strategy for utilizing the allocated funds to accomplish distinct objectives. Commissioner Werfel appears to perceive this as a chance not only to increase the number of personnel but also to transform the agency’s operations.
Goals of the IRS Spending Plan
The plan as a daring vision of what lies ahead for both taxpayers and the IRS. With the long-term funding now secured, the IRS has a unique opportunity to revolutionize its operations and deliver the level of service that the public deserves. By implementing service and technology upgrades, the IRS of the future will be noticeably distinct from its present form. This plan sets the direction for the IRS and tax administration going forward.
The plan centers around achieving five primary objectives, which, according to Werfel, will be realized through a sequence of initiatives and projects:
- Significantly enhance services to enable taxpayers to fulfill their obligations and access the tax benefits they are entitled to.
- Promptly address any issues that taxpayers encounter.
- Concentrate increased enforcement on taxpayers with complicated tax filings and substantial noncompliance to tackle the tax gap.
- Provide state-of-the-art technology, data, and analytics to operate more efficiently.
- Attract, retain, and empower a highly capable, diverse workforce, and foster a culture that is better equipped to deliver outcomes for taxpayers.
The plan details particular initiatives to achieve the five objectives outlined, with 42 initiatives outlined in total. The plan encompasses over 190 key projects, including several significant projects and milestones. Moreover, there are over 200 specific milestones laid out in the plan, with particular year-based timeframes provided for each milestone. The report is also indexed in this manner at its conclusion.
Tackling the Immense Challenge: Strategies for Success
Werfel reaffirmed the IRS’s commitment to Treasury Secretary Yellen’s directive not to raise audit rates for small businesses and households earning less than $400,000, as he promised during his confirmation hearing. He stressed that the agency’s attention is centered on pursuing high-income and high-wealth individuals, large corporations, and complex partnerships who are not paying their taxes. Consequently, he stated that “there are no intentions to increase the audit rate for small businesses and households earning less than $400,000.”
Despite the existence of skeptics who may be disappointed with the IRS plan’s lack of specific figures and metrics, former IRS Commissioner and current Vice Chairman at alliantgroup, Mark Everson, sees positives in what he calls “an immense challenge.” He notes the agency’s commitment to rapidly resolving taxpayer issues as a significant step forward, as it acknowledges the need for the agency to act with greater agility. Growing backlogs and difficulties in communicating with the IRS have contributed to heightened tensions among taxpayers and other stakeholders.