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Regulation and Compliance > Federal Regulation > IRS

Senators Press Yellen to Boost IRS Funding

By Melanie Waddell

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What You Need to Know

  • The IRS is ill-equipped to assist with basic tax filing needs and crack down on wealthy tax cheats, the senators said.
  • They asked for minimum 14% increase in annual IRS funding, and an $80 billion investment in the IRS over 10 years.
  • The agency’s FY 2021 budget was $2.7 billion less than its FY 2010 budget.

Sens. Elizabeth Warren. D-Mass., and Jeff Merkley, D-Ore., told Treasury Secretary Janet Yellen Thursday in a letter that persistent underfunding of the Internal Revenue Service will have negative consequences for taxpayers and pressed for a minimum 14% increase in annual IRS funding, and an $80 billion investment in the IRS over 10 years.

“Years of underinvestment in the IRS, compounded by pandemic-related challenges, have left the agency ill-equipped to assist Americans with basic tax filing needs and crack down on wealthy tax cheats,” the senators wrote.

The senators cite a recent report that many IRS services could be impaired because of budget constraints and pandemic-related issues.

“Your department has warned of a ‘frustrating season’ for taxpayers, including processing and refund delays and issues with other taxpayer services on which millions of Americans rely,” the senators wrote.

“These risks come as no surprise after over a decade-long gutting of the IRS budget, which has prevented the agency both from taking action against wealthy tax cheats and providing adequate assistance to the majority of Americans trying to honestly file their taxes,” they added.

According to IRS Commissioner Charles Rettig, the agency’s FY 2021 budget was $2.7 billion less than its FY 2010 budget in real terms, a 22% reduction, they said.

As a result, IRS staffing, has also fallen 22% since FY 2010, while the number of tax filers has increased by 14%, the senators explained. During the 2021 tax filing season, IRS assisters answered only one out of every nine calls.

“We are glad to be working with the Biden Administration on its proposal to invest nearly $80 billion in the IRS over the next 10 years as part of the Build Back Better Act. As you have emphasized, this funding will allow the IRS to pursue better enforcement with respect to wealthy taxpayers and large corporations, raising at least $2.3 trillion over the next two decades, according to Treasury estimates,” they added.

A boost in funding will also allow the IRS “to make transformative investments in taxpayer services, including hiring staff to answer taxpayer calls and process returns and refunds, as well as modernizing IT systems to help taxpayers file their taxes and claim tax credits and refunds,” the senators wrote.

Other senators joining the letter are: Edward Markey, D-Mass.; Ron Wyden, D-Ore.; Kirsten Gillibrand, D-N.Y.; Angus King, I-Maine; Sheldon Whitehouse, D-R.I.; Chris Murphy, D-Conn.; Richard Blumenthal, D-Conn.; Tammy Duckworth, D-Ill.; Tom Carper, D-Del.; Tammy Baldwin, D-Wis.; Alex Padilla, D-Calif.; Bernie Sanders, I-Vt.; and Cory Booker, D-N.J.

Melanie Waddell

@Think_MelanieW

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