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IRS Commissioner Werfel Reflects on His First Year

S.J. Steinhardt
Published Date:
Apr 15, 2024

As the IRS has made improvements over the last year, in no small part due to an infusion of funding from the Inflation Reduction Act, “despair has turned to cautious optimism,” National Taxpayer Advocate Erin Collins wrote this year in her report to Congress. To commemorate his first year as commissioner, Danny Werfel sat for an interview with The Washington Post.

Asked why he thought the agency needed more money than its discretionary budget of $12.3 billion for both fiscal years 2024 and 2025, Werfel said that that was “definitely not enough money." He pointed out that the IRS’s budget is “essentially the same as it’s been since around 2011, 2012 and 2013. …Think about how different the tax system is today versus [how] it was back then.”

The Post asked Werfel about racial disparities in audits, referring to a 2023 study that found that IRS audited Black taxpayers at 2.9 to 4.7 times the rate of non-Black taxpayers. The report came out just as Werfel was preparing for his confirmation. After starting the job in May, he submitted a letter to the U.S. Senate Finance Committee stating that “our initial findings support the conclusion that Black taxpayers may be audited at higher rates than would be expected given their share of the population.”

During the interview, Werfel said, "One of the first things we had to do was acknowledge [the problem]. This study is legitimate. The IRS has a significant problem with its approach to audits . . . where these audits are having a disparate impact on Black taxpayers. But acknowledgment wasn’t nearly enough. The first order of business was to dramatically reduce the number of audits” and the second “is to change the underlying math or algorithm that leads to the case selections.” The IRS identified the critical changes to the algorithm that will eliminate the disparity, he said, and now has to test it.

Werfel also pronounced himself “very happy” with Direct File, which has been used by about 60,000 taxpayers so far, claiming more than $30 million in refunds, saving millions in estimated filing fees.

Asked what he hoped to do with this agency in the time that he was in the role, Werfel responded that the IRS’s goal “is not popularity. The goal is to do our jobs most effectively, because we play such a critical role.”

“We have to recognize that it’s in the brochure that the tax collector is not a job that is popular,” he added. “But I want the American people to see us as having a North Star of trying to get better and better at our job so that the game is as fair as possible.”

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