On Thursday, President Biden’s nominee to be IRS commissioner, Danny Werfel was confirmed by the Senate in a 54-42 vote. A few weeks prior, on Feb. 15, Werfel testified in front of the Senate Finance Committee as part of the effort to get his nomination approved.
As Werfel begins his tenure, there are still many questions as to how he intends to rectify many of the IRS’ numerous shortcomings, especially amid questions about political influence on the agency.
In 2021, the IRS only answered an abysmal 11 percent of phone calls relating to issues Americans were having with filing their taxes. That means that if you called the IRS for guidance, your call has a 9 in 10 chance of not being picked up. There is little doubt that the IRS allowing 53 percent of its workforce to work from home full-time contributed to this problem.
Even if that problem is fixed, and more workers begin to go into the office, the amount set aside in the Inflation Reduction Act for taxpayer services was $3 billion. The amount allocated to enforcement operations? $45 billion.
Werfel was questioned directly about his priorities as the IRS commissioner in light of these facts. Specifically, Sen. John Thune (R-S.D.), asked “In terms of priorities, as you look at this issue, what will be the higher priority for you when it comes to administering the IRS funding allocation? Better customer service for taxpayers, or increasing the number of audits on American taxpayers?”
Werfel responded “It will be a dual priority, Senator. Equally focused on improving taxpayer service — in particular for working families and small businesses — and side by side with that will be a commitment to improve the IRS’s capacity to unpack complex returns. Which is something I understand today, they lack that capacity.”
That is an alarming answer. While we can all agree that everybody should follow the law and pay their taxes, Werfel’s priorities seem to be out of sorts. Supporting Americans who are trying to follow the law so as to not get audited should be more important than increasing the very audits those taxpayers are trying to avoid. This especially rings true as Werfel, in his testimony, repeatedly tried to paint a picture of an IRS which revolves around the needs of the taxpayer.
Questions about those who the IRS would likely audit abound, as well. On Dec. 6, 2022, the IRS put out what it called a “GET READY” notice, to prepare taxpayers for the tens of millions of new 1099-K forms which would be going out based on one’s Venmo and other third-party payment app transactions. In the American Rescue Plan, the threshold for one to get a 1099-K from third-party payment apps went from $20,000 AND 200 transactions to $600 with no minimum number of transactions.
Understandably, this caused a lot of panic among people who were about to get socked with new forms stemming from innocuous, non-taxable transactions like garage sales or splitting checks at restaurants. Rather than potentially digging up receipts from years prior or finding other means to prove that these transactions were not taxable, many would ultimately just pay “taxes” which are not legally owed.
Just 17 days after the GET READY notice, on Dec. 23, right before Christmas, the IRS suddenly deemed 2023 to be a “transition year,” meaning that the law would not be enforced this year. Not only is this legally dubious, as sudden changes such as this one to the tax code need to be undertaken by Congress rather than unelected bureaucrats, but the timing is also questionable.
If enacted, the added burdens on taxpayers would have fostered a lot of resentment toward Democratic leaders in the White House and Congress. The IRS at the last moment saved Democrats from potentially having to make political sacrifices at home and in Washington, as this was being negotiated into the year-end omnibus spending bill.
It is worth asking whether there were any communications between IRS officials and Democratic politicians regarding the 1099-K rule, especially since IRS unions give more than 95 percent of their PAC spending to Democratic politicians, indicating a close relationship.
There are a lot of questions surrounding Werfel’s plans for the direction of the agency and how he will use the $80 billion in funding provided by hardworking taxpayers. Some of his answers in his testimony to the Senate last month warrant more scrutiny as to political influence over the IRS and the statutory powers of the IRS.
Americans deserve to know what their tax agency is doing, how their money is being used, and, most importantly, to not be intruded upon when there is absolutely no reason for it.
Ben Susser is a policy and communications associate at Americans for Tax Reform