President Joe Biden’s nominee to lead the Internal Revenue Service pledged to increase scrutiny of certain wealthy taxpayers at his confirmation hearing Wednesday before the U.S. Senate Committee on Finance.
Daniel Werfel, most recently of Boston Consulting Group, served a stint as Acting Commissioner of the IRS in 2013. Lawmakers questioned him on a range of issues, including setting audit priorities, improving customer service, and modernizing the agency’s technological capabilities. Werfel is expected to be confirmed, as Democrats have enough votes to finalize his appointment without Republican support.
Here are three takeaways for taxpayers from the hearing:
Increased Audits for High Earners
Sen. Catherine Cortez Masto (D-Nev.) asked Werfel about the claim that the IRS plans to hire 87,000 new agents to audit taxpayers. The assertion, circulated by some Republicans last fall around the midterm elections, was a mischaracterization of Biden administration plans that resurfaced last year around the passage of the Inflation Reduction Act. The law included $80 billion in funding for the IRS, including some earmarked for new hires in a variety of functions, not just auditing.
Werfel committed to honoring the Biden administration’s priority to keep audit rates stable, relative to historic levels, for small businesses and households making under $400,000.
The focus of new hires, he said, would be “to unpack very complicated and intricate returns, which is a capacity gap that exists today.” That reinforces his statements in written testimony submitted before the hearing, in which Werfel wrote that he would focus on “enhancing IRS capabilities to ensure America’s highest earners comply with applicable tax laws.”
Improved Customer Service
Last year, only 13% of calls to IRS customer service lines were answered. In preparation for the current tax season, the IRS announced the hiring of 5,000 new telephone assistors, funded by the Inflation Reduction Act. So far this year, 90% of calls to the agency have been answered, lawmakers said Wednesday.
Werfel promised to continue this improved customer service if confirmed. He also pledged to look into other ways to get information to taxpayers, including through smartphone apps.
This season, the IRS will be providing in-person assistance to taxpayers at select locations one Saturday a month through May. See here for more information.
Better Tech Capabilities
IRS technology is outdated, Werfel acknowledged. As of last October, 92% of the more than 164 million individual tax returns received were filed electronically, according to the Taxpayer Advocate Service within the IRS. The agency has in past years struggled to process the remaining paper returns. While it has made progress clearing the backlog, taxpayers who file paper returns still experience delays in processing their returns and receiving their refunds. Werfel pledged to help the agency “move out of paper” by scanning paper returns for quicker and easier processing.
Write to Elizabeth O’Brien at [email protected]
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