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Yellen: IRS to reveal plan this week for spending $80 billion

House Republicans passed legislation that would pull back most of the money

Treasury Secretary Janet L. Yellen delivers remarks as new IRS Commissioner Danny Werfel looks on during his swearing-in ceremony on Tuesday.
Treasury Secretary Janet L. Yellen delivers remarks as new IRS Commissioner Danny Werfel looks on during his swearing-in ceremony on Tuesday. (Bonnie Cash/Getty Images)

The IRS will lay out its plan this week for spending $80 billion in extra funding over the next decade, Treasury Secretary Janet L. Yellen said Tuesday.

The strategic operating plan will offer the first glimpse of exactly what the IRS has in store for funding that Democrats passed last August to crack down on tax cheats and make dealing with the agency smoother for taxpayers. Lawmakers have pressed Yellen in recent congressional hearings to produce the plan after the IRS missed a mid-February deadline she originally set.

Yellen emphasized that the IRS will undergo a transformation thanks to the nearly $80 billion in funding during a swearing-in ceremony Tuesday for the agency’s new commissioner, Danny Werfel.

Speaking in the lobby of the IRS headquarters, she said the agency needs to invest in technology to make employees more productive, shift to doing things digitally and improve automated services. Yellen said that to go after unpaid taxes from wealthy households and big businesses, the money will fund data and analytics along with hiring more accountants and attorneys.

Yellen added that combined with “stable discretionary funding” from the annual appropriations process controlled by Congress, the $80 billion for the IRS will reverse a persistent gap between taxes owed and paid to the federal government.

But the annual funding is dependent on a Republican-controlled House, which has railed against an IRS initiative that it warned would lead to an “army of auditors” targeting the middle class. The first bill the House passed this year was a measure to claw back most of the money.

Republicans have also urged Yellen to provide more detail on a general pledge that she repeated again on Tuesday: that audit rates won’t rise for small businesses or households making less than $400,000 per year relative to historical levels. That’s in line with President Joe Biden’s campaign promise not to raise taxes for households that fall under that threshold.

But GOP lawmakers have said it’s unclear exactly what Yellen’s statement means. How the audit dispute is handled in the strategic operating plan this week will likely draw attention on Capitol Hill.

The plan is expected, in part, to delve into goals for modernizing the IRS — as lawmakers on both sides of the aisle generally agree that it’s relied too long on dated technology and conducting business on paper instead of online.

The plan would ensure that within the first five years, taxpayers will be able to securely file all documents and responses to the agency online and download their data and account history, according to a Treasury official.

Another 72 types of IRS notices, including those in Spanish, will be available on online accounts by the end of fiscal 2024, and more complete and downloadable account histories will be up and running by the end of fiscal 2025, the official said. The changes could mean faster service for taxpayers by avoiding paper-fueled backlogs at the IRS, and could allow taxpayers to avoid exchanging letters in the mail.

With the plan coming this week, Werfel’s budding tenure at the IRS is already set to be intricately tied to his rollout of the $80 billion.

“Throughout my term, my top priority will be to ensure the IRS uses this historic investment wisely and in the way that best benefits the country,” he said in a speech after his swearing-in. “This is our moment in history to transform the IRS.”

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