Earlier this summer, my Democratic colleagues rammed through Congress a partisan bill that provided the IRS $80 billion in mandatory funding. This additional $80 billion, which comes on top of its annual appropriations, is over six times more than it received through annual appropriations in 2022.
This unprecedented increase in funding demands a comparable increase in congressional oversight of the IRS. Exacting and unyielding oversight, to be precise.
To begin this oversight, Finance Committee Republicans, including myself, sent a letter to the Government Accountability Office (GAO) in October.
In that letter, we asked for information on outstanding issues GAO has identified at the IRS, and the status of recommendations the IRS has failed to implement. The GAO responded to that letter at the end of November. As expected, there are many ongoing and persistent issues.
In the November letter, the GAO notes that the “IRS had 41 unimplemented recommendations related to information system control deficiencies at the beginning of the fiscal year 2022 audit of IRS’s financial statements.”
These outstanding recommendations related to information system control deficiencies are especially concerning given the recent unauthorized disclosures of taxpayer information.
As you’ll recall, almost a year and a half ago, ProPublica began publishing stories based on “a vast trove of Internal Revenue Service data.”
We’re no closer to understanding how ProPublica obtained confidential taxpayer data now than we were in June of 2021.
I’ve sent multiple letters to the IRS and the Justice Department requesting updates on their supposed investigation of the matter — yet they’ve failed to provide any information concerning how confidential taxpayer information was disclosed, or if additional taxpayer data remains at risk.
In fact, just last week we learned of another confirmed data breach. The IRS inadvertently re-disclosed information from tax returns filed by tax-exempt groups. This is after the information was already improperly disclosed in September. The IRS clearly has a problem protecting taxpayer information.
Now, the 41 information system deficiencies are only a fraction of the total open recommendations identified by the GAO.
GAO said that “as of November 2022, IRS had 176 open recommendations. Fully implementing these recommendations could significantly improve IRS’s operations.”
Despite IRS’s shortcomings, my Democratic colleagues handed the IRS $80 billion in additional funding without seeing its plan for the funds or including additional oversight. Moreover, my Democratic colleagues heavily weighted the additional funding toward enforcement rather than updating its systems or taxpayer services.
Specifically, more than half of the additional IRS funding is dedicated to enforcement, while less than five percent is for taxpayer services. The lopsided nature of the IRS funding raises legitimate concerns of overly aggressive tax enforcement.
This is especially true given 3.2 million tax filers are still waiting for the IRS to process their 2022 tax return. Countless others are trying to voluntarily comply with the law but can’t get anyone at the IRS to take their call. As a result, my office has been flooded with calls from frustrated Iowans requesting assistance with the IRS.
This is a recipe for disaster. While serving on the 1998 IRS Restructuring Commission, I heard firsthand from small businesses and individuals about the abusive tactics IRS can use when enforcement takes priority over taxpayer service.
Given these and other concerns, Senator Thune and I introduced the IRS Funding Accountability Act.
Our bill would place a moratorium on IRS spending its additional funding, other than for taxpayer services, until IRS submits its spending plan to Congress for approval. Congress would then have the option to reject that plan.
If Congress approves the spending plan, the IRS and Treasury would be subject to regular reporting requirements and incur financial penalties for non-compliance.
As the former chairman of the Senate Finance Committee, I understand the necessity for enforcement. Taxpayers should pay what they owe. Not a penny less or a penny more.
During my time on the Finance Committee, I’ve worked to provide the IRS with additional tools to identify tax cheats and collect tax debts that are already due and owed.
For instance, I helped create the bipartisan IRS Private Debt Collection Program, which uses private contractors to track down and collect taxes owed that the IRS has shelved as low priority.
This program has collected nearly $3 billion in net revenue since Fiscal Year 2019, including over $1.3 billion in Fiscal Year 2022 alone.
Every year this program has operated, it’s brought in more revenue to the Treasury.
Additionally, I authored improvements to the IRS whistleblower program in 2006. This program incentivizes whistleblowers to expose tax fraud by corporations and high net-worth individuals. Since 2007, this program has collected over $6 billion from non-compliant taxpayers.
Both of these proven programs initially received resistance from the IRS. However, I appreciated former Commissioner Rettig’s public support for both.
If President Biden is really committed to closing the tax gap and going after wealthy tax cheats, he should encourage his nominee for IRS Commissioner, Daniel Werfel, to embrace both these programs.
The IRS has significant and persistent issues that need to be addressed. Congress must exercise robust and aggressive oversight.
This is especially true given the outrageous infusion of $80 billion that’s mostly geared toward enforcement against the taxpayer.
The IRS must do a better job protecting taxpayer data, provide better taxpayer service and use its existing enforcement tools and regular appropriations funding more efficiently.
Simply put, that’s what the taxpayer deserves.