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Internal Revenue Problems

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No one enjoys having to call a government bureaucrat, especially if the topic is one’s taxes. In fact, it’s arguably one of the few things that all Americans agree on anymore. Now, with tax season coming down the tracks, the Biden Administration says it is trying to make it the process little less taxing on taxpayers – but is anyone buying what the White House is selling?

After the last Congress appropriated an additional $80 billion for the I.R.S. over the coming decade, the agency has been in the bullseye of a now divided Congress. The rankle over revenue collection is, of course, nothing new, but the Democratic Party’s course of action on the matter is, according to its critics, adding fuel to the fire.

Americans are increasingly having to endure longer wait times while on the phone with the agency, and are also facing a higher likelihood of their tax returns not being processed in a timely manner. According to the New York Times, nine million returns were unprocessed at the end of 2022 and almost 90% of callers were unable to speak to an agency representative.

These front-facing problems are indicative of deeper, more alarming problems with the I.R.S., which routinely must make choices about who needs to be audited, and who can be passed over. Part of the reasoning behind the previous Democratic congressional proposal – which was supported by the White House – suggests that successive funding cuts have forced the agency to conduct audits that are less costly to undertake, which often means Americans in the lower and middle classes instead of the wealthy or powerful corporations.

Congressional Republicans, however, are not convinced that increased funding will lead to a more equitable distribution of tax audits since the previous incentive for the agency remains largely intact. Officials at the Treasury Department have been tasked to produce a detailed plan of action for the newly allocated funds by February; but it seems unlikely that any plan will assuage Republican concerns.

Instead, Republicans may try to leverage the I.R.S. funding against talks over the debt ceiling, two issues that politicians from both parties surely see as connected. President Biden’s talk of vetoing any reductions to the new funding could come to naught should the Republicans flex their muscles in the House of Representatives.