What's next, now that the IRS has a new commissioner and a new budget
SACHA PFEIFFER, HOST:
Let's check in with one of the country's least-loved essential government agencies, the Internal Revenue Service. The IRS lost almost 20% of its workforce over about the past decade even as the U.S. population increased and the tax code got more complicated. So last year the IRS received $80 billion in federal funds to improve customer service, upgrade technology and crack down on tax evasion. As of early March, the IRS also has a new commissioner. His name is Danny Werfel, and he's with us now. Commissioner Werfel, welcome to ALL THINGS CONSIDERED.
DANNY WERFEL: Thank you, Sacha. It's great to be on.
PFEIFFER: More than half of the $80 billion the IRS is getting is going to enforcement, making sure that all people, but especially wealthy people in large companies, pay their taxes. This has people very nervous about who's going to be targeted and what it means. What's the big picture of what you hope to accomplish and on what timeline?
WERFEL: Where we have lost capacity over the years is in our ability to assess high-wealth, high-income filers. So these are individuals - millionaires, multimillionaires and billionaires. It's large corporations, multinational corporations. It's complex and large partnerships. There are roughly 390,000 of these wealthy and very wealthy filers. And right now the IRS has about 2,600 people to assess. And they're very complicated. Because these organizations are, you know, multinational or have a variety of different complex structures, the tax returns are complicated. So there is an under-capacity that we have. If we have 2,600 people for 390,000 of these filers and these are our most complex filings, we have to increase our capacity to deal with that. And that involves hiring - and then not just auditors but economists and engineers and data scientists - to really figure out and assess for the American people what these wealthy filers owe versus what they're paying and make sure that we're closing that gap.
PFEIFFER: The IRS has pledged not to expand audits for people in businesses making under $400,000 a year. But congressional Republicans have already grilled you on their belief, their fears that this will not be true in practice. And in many ways, it's easier to audit less wealthy people because they don't have expensive lawyers and accountants. So how - what reassurance, if any, can you offer people that the middle class, who are fearful they're about to be more likely to be audited - is that likely to happen?
WERFEL: It's not. And, you know, I'm offering the strongest assurance I can that the audit rates that are in place for people earning under $400,000 a year in small businesses - those audit rates are not going up. You know, my message for people out there is that if you're a mom and pop business, if you are a middle- or low-income filer, there's no new wave of audits coming. Things are not going to change for you as a result of the Inflation Reduction Act from an enforcement standpoint.
PFEIFFER: How much more tax revenue do you think you can bring in through more aggressive enforcement?
WERFEL: You know, a lot. And that is something that you actually can quantify. There's an organization in the government called the Congressional Budget Office that basically looks at how the IRS operates and how much money we bring in when we expand. They assess, for example, that for every dollar of enforcement, it returns $6 back to the U.S. Treasury or back to the government's bottom line. I think the latest estimate that I saw was that if we were to not do what we're planning to do under the Inflation Reduction Act, we would lose out on roughly $190 billion. And now there's balance in the system because we will, as we grow this capacity, be able to be on equal footing with wealthy filers and be able to really assess what they owe.
PFEIFFER: You've been in your job only about two months, but you've already had an April tax season come and go. You know there have been many complaints about IRS customer service in recent years. During the pandemic, I had to call the IRS. I was on hold for an hour - any progress in terms of IRS helpline wait times?
WERFEL: Significant progress. I mean, this last filing season was night and day versus the previous few years. And what I mean by that is we moved from about a 20% rate of answering the phones to historic highs, closer to 90%. Our wait time on the phones went from almost 30 minutes last year to about three minutes on average this year. And the reason for that was the Inflation Reduction Act funds that we're using to start building back our capacity to serve the very complicated tax system that we have. And for example, we hired 5,000 people to staff on our call lines and train them up and got them ready to answer those calls that come in every year.
PFEIFFER: Beyond helpline, any other long-term goals for customer service?
WERFEL: Many. And we need to meet taxpayers where they are. Taxpayers have a lot of different preferences for how they want to engage in the IRS and a lot of different means and abilities for how they want to engage with the IRS. Some want to walk into a walk-in center and talk to us in person. And so we have the ability now to reopen walk-in centers that were closed due to underfunding and fully staff them and offer Saturday hours. People want to be able to send us paper forms. We'd rather they file electronically, but when we get that paper, we now need more people to process the paper, and we're able to hire more people to do so.
People want the IRS website to work more effectively. With funds, we can start to build out a world-class customer service set of solutions that taxpayers deserve because going to your local bank or your airline, you have a choice. Paying your taxes is mandatory. People have to come to the IRS. And with the funding provided by the Inflation Reduction Act, we're very committed to improve that customer service since people don't have a choice. They have to come.
PFEIFFER: IRS Commissioner Danny Werfel. Thank you for the time.
WERFEL: Thank you, Sacha. Transcript provided by NPR, Copyright NPR.