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IRS Commissioner Advocates for Continued Funding in Senate Finance Committee Hearing

S.J. Steinhardt
Published Date:
Apr 17, 2024

Testifying before the U.S. Senate Committee on Finance on April 16, IRS Commissioner Danny Werfel began with a review of this past tax season as he answered questions about the agency’s proposed budget, Accounting Today reported.

“I’m pleased to report the 2024 tax season opened on schedule on January 29, and we’ve seen a historic filing season unfolding since then,” he said in his prepared statement. “Through March 30, the IRS received more than 90.3 million individual income tax returns and issued more than 60.8 million refunds for more than $185.6 billion.”

Werfel noted that Inflation Reduction Act (IRA) funding had helped to improve wait times, expand service in walk-in sites and address compliance issues by focusing on delinquency and nonfiling among high-income individuals, as well as tax evasion among large and complex partnerships and corporations.

He then told the committee that much work remains to be done, such as improving phone service, strengthening data security, increasing access to available tax credits, increasing access to refundable credits for eligible taxpayers, and protecting and supporting scam victims.

“Our ongoing success hinges on sustained investments to make sure that we have the right size workforce, with the right training and tools as well as a modern technology infrastructure, with increasingly modern web-enabled tools for taxpayers,” he said in asking for continued funding for the IRS after Congress rescinded approximately one quarter of its IRA funding after a deal last year to avert a debt limit default. “These are needed to ensure the IRS is ready to implement the tax system of today and the future.”

The proposed funding would also go toward expanding the Direct File program which the IRS launched this year. The 12-state pilot program was praised by the committee’s chairman, Sen. Ron Wyden (D-Ore.).

“Frankly, it seems like a whole lot of people were pleasantly stunned that a federal agency—particularly one as frequently vilified as the IRS—was able to build a helpful website that works,” Wyden said in his opening statement. “The tens of thousands of taxpayers who used Direct File this year collectively saved millions on fees they would have paid to one of the tax software giants. The website was user-friendly. It was quick and easy to use. It didn’t hassle users with upcharges for add-on services they didn’t need.”

The committee’s ranking Republican, Sen. Mike Crapo (R-Idaho), criticized the Direct File program, and a number of other Republicans questioned why the IRS didn't use the "off-the-shelf" tax prep software instead of developing its own program. 

Crapo pointed to a report last week from the Government Accountability Office that put the cost of the program as exceeding $100 million just through fiscal year 2024 while only serving 100,000 taxpayers this year.

Werfel defended the usefulness of the program, and he received support from Democrats on the committee, including Sen. Elizabeth Warren (D-Mass.).

"Thousands of taxpayers already have successfully used the system, and users are giving the new option positive reviews," said Werfel. "These early results from Direct File have shown taxpayers like the ease and convenience of the tool. It is important to note that a core part of the IRS's mission is to meet taxpayers where they are and ensure they have options to fulfill their tax obligations that meet their needs. I want to emphasize that taxpayers will always have choices for how they prepare their taxes. They can file using a trusted tax professional, our Free File program, tax software, or free tax preparation services such as the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs, or they can file a paper return.”

"Despite the cheery rhetoric at today's hearing, the IRS Direct File program remains costly, confusing and completely unnecessary," stated a group of tax software companies known as the American Coalition for Taxpayer Rights, Accounting Today reported.

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