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Treasury Secretary Janet Yellen. (Photo: Bloomberg)

Regulation and Compliance > Federal Regulation > IRS

Yellen Outlines Taxpayer Service Upgrades in IRS Overhaul

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What You Need to Know

  • The effects of the IRS' $80 billion budget boost should be noticeable by next filing season, Yellen said.

Treasury Secretary Janet Yellen highlighted the Biden administration’s plans for boosting the Internal Revenue Service, including efforts to dramatically increase the capacity of in-person and call-in support services, and to ramp up audits of top earners.

Congress approved $80 billion in new funding for the tax-collection agency in legislation passed in August, clearing the way for big upgrades in technology, taxpayer services and enforcement that would concentrate on the wealthy and corporations.

The new money will “transform the IRS into a 21st century agency,” Yellen said in remarks prepared for delivery during a visit to an IRS facility just outside Washington. “While all the improvements won’t be done overnight, taxpayers can expect to feel real differences during the next filing season.”

Yellen also highlighted plans to increase audits of top earners to help reduce an amount of unpaid taxes that’s “grown to enormous levels.” In 2019, the top 1% of earners were estimated to owe over a fifth of the so-called tax gap, amounting to around $160 billion, she said.

“High earners are paying far less than they owe,” she said. “This means that working families are shouldering a disproportionate burden of investing in our roads, schools, military, and more.”

One reason for the increase in the tax gap has been an increasing share of income across the economy falling under the classification of “complicated partnerships,” the Treasury chief said. That share has “skyrocketed from less than 5% of total income in 1990 to over a third today,” she said.

As for the coming filing season, Yellen outlined the following among the steps the IRS will be taking to support taxpayers:

  • Triple the number of taxpayers served at in-person support centers to more than 2.7 million
  • Raise the proportion of callers reaching an employee to 85% from 10-15%, while cutting average wait times in half, to less than 15 minutes
  • Automate the scanning of millions of individual paper returns, speeding refunds
  • Allow taxpayers to receive and respond to notices online

Yellen said the IRS would hire 5,000 customer-service representatives to enhance its telephone operations.

The IRS has promised to reduce a backlog of paper filings that reached historically high levels during the coronavirus pandemic. Dozens of congressional Republicans and Democrats have demanded the agency relieve the backlog and improve service.

Yellen also said the IRS would convene customer-service experts from the private sector to advise the agency on modernization efforts.

Pictured: Treasury Secretary Janet Yellen. (Photo: Bloomberg)


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