87,000 IRS agents could help under-resourced workforce

Democrats are gambling that a bigger IRS will equal a better IRS. The sweeping Inflation Reduction Act passed yesterday by the Senate allocates $80 billion to beef up the Internal Revenue Service (IRS) over the next decade, most notably by hiring another 87,000 agents.

The goal, supporters say, is to amplify tax-enforcement efforts and aim more of them at corporations and individual high-income earners. Their argument is that more money could be collected by auditing these groups than by going after folks in the lower- and middle-income brackets who underpay their taxes or make math errors on their 1099s. Lately, the IRS has grown more reliant on these sorts of automated audits—they drain almost no resources; unlike, say, targeted enforcement against corporations or rich people with big teams of tax lawyers.

The Republican National Committee has claimed that “this army of new IRS agents [will] disproportionately target poorer Americans.” In response, IRS Commissioner Chuck Rettig vowed in a letter to Congress last week that the agency’s new enforcement money won’t mean more audits for anyone earning less than $400,000.

Regardless, conservatives aren’t responding well to news that more eyeballs will be laid on Americans’ tax returns.

Senator Ted Cruz of Texas likened the increase to “asking for an infestation of locust and lice.”

The agency’s losing fight for resources stretches back years—until now. You may recall the news in March that the IRS had found a way to hire 10,000 more agents to help clear a backlog of more than 20 million unprocessed tax returns. (Fewer Republicans complained back then.) Adding 80,000 more agents via the Inflation Reduction Act will be the agency’s largest-ever hiring spree.

Still, it begs the question: How big has the IRS been, historically?

The short answer is larger for the past 10 years, plus many years before that, though according to a review of the agency’s data, the size has fluctuated. From the mid-1960s—when the IRS’s annual congressional reports began including workforce size—until 2010, the pattern was an upward-sloping line, but a year-by-year study of the reports shows the workforce size has never kept up with expenditures or revenues.

During that nearly half a century, the agency’s operating costs increased 20-fold: from $625 million in 1966 to nearly $12.4 billion in 2010. Tax revenues also increased about twentyfold: from $129 billion to $2.3 trillion. The workforce size increased less than onefold, from 63,000 to 107,000. It was actually back in 1987, under President Reagan, that the IRS’s workforce size first broke 100,000 employees. Operating costs then were $4.4 billion. The agency continued to employ more than 100,000 workers up until 2011, when cuts started shrinking the agency’s budget, although, by then, expenditures had climbed to $12.4 billion.

The IRS’s Taxpayer Advocate Service says that since 2010, Congress has actually reduced the budget by about 20%, once adjusted for inflation. The workforce has decreased by even more, reaching 78,661 last year, with operating costs of $13.7 billion. Proponents of better resourcing the agency argue that various Republican-led Congresses and the White House have diverted funding for so long that even $80 billion might not be enough to resolve all the problems.

Erin Collins, the IRS’s national taxpayer advocate, has lately also been painting pictures of hard times inside the agency. “When funds are tight, organizations need to get creative and find ways to do with less,” she wrote early last year. “But there are limits to what can be done with less—particularly with 20% less.”

In 2020, she noted, the IRS received over 100 million phone calls. Employees answered just 24% of them. Hold times averaged 18 minutes. “Put differently,” Collins added, “IRS employees did not answer more than 75 million telephone calls from taxpayers seeking help in complying with their tax obligations.”

Source link

Leave a Reply

Your email address will not be published.