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Yellen Underscores IRS Revamp as Filing Season Kicks Off

Posted on Jan. 24, 2023

Treasury Secretary Janet Yellen has reiterated the need for the IRS to be “completely redone,” as officials assure taxpayers that they will see a significant improvement in customer service at the agency this year.

Speaking to Reuters January 22, Yellen said she decided to stay on in her role in large part because she wanted to see through the implementation of the additional funding secured for the IRS as part of the Inflation Reduction Act (P.L. 117-169).

“That agency needs to be completely redone, and it’s a big task,” Yellen said.

Yellen spent several months lobbying Congress to provide extra resources for the agency to improve customer service, eliminate the backlog of unprocessed returns, and step up enforcement to go after high-income tax dodgers.

Officials at Treasury are highlighting how the added funds — $80 billion over 10 years — have already been put to use to improve the customer service experience for taxpayers this filing season.

While cautioning that “changes will not take place overnight,” Treasury Deputy Secretary Wally Adeyemo said in a statement that the hiring of 5,000 additional customer service representatives, improvements in automated services, and full staffing of all 361 taxpayer assistance centers will provide a tangible improvement in taxpayer interactions with the IRS in 2023.

“Together, these reforms will result in faster processing of returns and quicker distributions of the credits and benefits that are vital to so many Americans,” Adeyemo said.

In a call with reporters, a Treasury official noted that the combination of morec ustomer service representatives and expanded automated services should see the IRS reach the 85 percent level-of-service target set by Yellen last year.

Asked by Tax Notes about the overall number of customer service employees available for this filing season in light of a recent report by the Treasury Inspector General for Tax Administration on staffing levels, the official said that while a specific figure couldn’t be disclosed, “the bottom line is a historic number of people will be able to answer the phone this year.”

Transition Year?

Still, Treasury officials have said not to expect a complete 180-degree change in the IRS this tax season, and policy observers have agreed.

“I would think of it almost as a transition year,” Alex Muresianu of the Tax Foundation told Tax Notes.

Muresianu said that while the expiration of several pandemic-era tax provisions should make things easier for the IRS this year, it remains to be seen how much the new funding will improve customer service.

“We’re in a wait-and-see period in terms of how the tax season goes,” Muresianu said.

Natasha Sarin of Yale University, a former counselor on tax policy and implementation at Treasury, told Tax Notes that while the additional funding for the IRS is crucial in enabling it to beef up its customer service capabilities, expectations should be weighed against the scale of the task ahead.

“They [the IRS] essentially have to fly an outdated plane while simultaneously building a new one,” Sarin said, noting that the structure of the additional resources was designed for the long term.

“The reason the agency has a 10-year investment plan is that once you hire a bunch of people, it will take time to train them,” Sarin said.

Sarin said a key challenge facing the IRS will be identifying a strategy to attract talent.

“Maybe it’s people at the end of their career who want to give back to their country. Or perhaps it is having an apprenticeship program for those at the beginning of their career. How you build up this talent pool is first order,” Sarin said. She added that hiring computer scientists to revamp the agency’s outdated software system will also be a top priority.

Subject Areas / Tax Topics
Magazine Citation
Tax Notes Federal, Jan. 30, 2023, p. 745
178 Tax Notes Federal 745 (Jan. 30, 2023)
Institutional Authors
Tax Analysts
Tax Analysts Document Number
DOC 2023-2024
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