The voices of Tax Policy Center's researchers and staff
Yes, I’ve known for months that my taxes are due by April 18. But I’m changing tax preparers. And I’m really busy at work. And there was the pandemic. And my return is really complicated.
That sounds a bit like the IRS’s recent admission that it missed its February deadline to complete a business plan for spending the $80 billion in new funding it got from Congress last year.
Last August, Treasury Secretary Janet Yellen directed the IRS to develop a plan by February 17 . But six months later, on February 16, the IRS said it wasn’t ready. Instead, it released a statement that said, in part, it “expects to deliver the plan to the Secretary in [the] coming weeks.”
Will the cherry blossoms beat the plan?
One top Treasury official said the plan would be complete “this spring.” President Biden’s nominee for IRS commissioner, Daniel Werfel, assured the Senate Finance Committee at his confirmation hearing that he would share the report with Congress and the public whenever it is complete. Yet neither the IRS nor Treasury has said how.
And, in fairness, IRS already is spending some of the cash. In August, Yellen authorized the “near-term use” of funds to improve services for the 2023 filing season. That allowed the IRS to hire 5,000 new telephone assistors and others.
It was a start, but the agency needs an overall plan for the new dollars.
There are plenty of reasons for the delay. The commissioner at the time Yellen set the deadline, Charles Rettig, left when his term expired in November. And the Biden Administration took its time nominating Werfel as his replacement. And the Finance panel didn’t hold a confirmation hearing for Werfel until February 15. And the full Senate has yet to approve him. And, yes, Werfel should have something to say about the plan he will be responsible for administering, at least in its first years.
Still, the spending plan may be the most significant document the IRS will produce for the remainder of the Biden Administration. It will, in large measure, establish the agency’s credibility with Congress and the public as it prepares to spend $80 billion over the next decade, a not-insubstantial sum even in the world of federal budgets.
Sure, the IRS and Treasury want to be certain they get it right. But the longer the delay, the slower the implementation. And the more time for urban myths to linger, including the baseless claim that the agency will use the funds to hire 87,000 revenue agents.
Keep in mind too that Treasury has been deeply involved in drafting the document since last summer. Yellen designated her most senior aide, Deputy Secretary Wally Adeyemo, to work with IRS to develop specific initiatives and timelines. It is not as if Yellen will be handed some surprise set of recommendations her staff never has seen before.
A surprising delay
Besides, the IRS isn’t writing this document on stone. Whatever the initial plan says, it almost surely will be revised as the agency’s needs change. The priority now is to get out something that will help assure Congress and the public that the agency has a credible plan for spending these substantial new dollars. And to get started on the needed changes.
The delay is especially surprising since the agency has known for years that new money could be coming. Presidential candidate Joe Biden proposed more funding for the IRS back in 2020. And the money was included in Biden’s first budget in May, 2021.
The IRS could have begun to develop a strategic plan for improving enforcement, taxpayer service, information technology, and all the rest as soon as Biden got elected. Indeed, if the IRS were a business, it would have developed a plan even before asking for funding. It only makes sense for any organization to first decide what it needs to do before figuring out what those initiatives would cost.
A fair trade
But this is Washington, and the IRS certainly is not a business. Still, the agency’s needs are hardly a state secret. One could, for instance, read the reports to Congress by the agency’s own Taxpayer Advocate Service or even its annual data book to learn what gaps need to be filled.
All I know is if somebody promised me $80 billion, or even $80,000, and all I had to do was describe by February 17 how I’d spend it, I’d be pretty sure to make the deadline.
Given the IRS’s (or maybe Treasury’s) delay, it seems only fair for the agency to waive those penalties and interest if I miss my April 18 filing deadline this spring. I’m looking forward to it.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
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