The Internal Revenue Service (IRS) plans to hire almost 30,000 new employees and invest $80 billion over the coming decade to modernize its outdated paper processes, according to a new report. The move is aimed at offering a better taxpayer experience and going after higher-income tax cheats, although some Republicans and other critics of the agency are expected to monitor this closely. The report details 190 key projects the IRS will undertake in the years ahead.
The Internal Revenue Service (IRS) has announced plans to hire nearly 30,000 new employees by the end of the next fiscal year and eliminate outdated paper processes. The agency will spend $80 billion over the coming decade to reverse years of underfunding and improve the taxpayer experience. Let’s take a closer look at the plans and what they mean for taxpayers.
Improving customer service
The IRS is allocating $6.77 billion to improve customer service and modernize operations support in the coming years. The agency has been criticized in recent years for relying on outdated technology, leading to a backlog of taxpayer refunds and headaches for taxpayers. To fix this, the IRS plans to allow taxpayers to file all documents online, develop technology to help taxpayers identify potential mistakes before filing, and reduce the need for letters in the mail.
More people, more power
The IRS also plans to hire almost 19,000 new employees focused on taxpayer services, operations support, and business modernization in coming years. That’s in addition to almost 9,000 employees devoted to increased enforcement who will be on the job by November 2024. The agency is aiming to hire more customer service agents and data scientists than ever before.
The goal is that increased computing power and technical expertise will allow the agency to more efficiently serve customers while also chasing down tax cheats. The Biden administration estimates that the top 1% of Americans evade $160 billion in taxes per year.
Efforts focused on the rich
The IRS will devote almost $1.8 billion to enforcement in the coming years, with efforts growing over time and costing over $45 billion over the full decade. These plans come amid deep Republican suspicion of the Biden administration and how it will implement the new enforcement money. However, Biden officials have promised that GOP fears are unfounded and that the influx of money won’t lead to higher audit rates for small businesses and households making under $400,000.
Although Republicans have expressed concerns that these efforts will target “lower-hanging fruit” in lower tax brackets, Democratic lawmakers and outside analysts predict a hefty return on investment. They have previously said that the $80 billion will return over $200 billion to the Treasury in increased tax revenue.
The IRS is getting a much-needed boost to reverse years of underfunding and improve the taxpayer experience. The agency is aiming to hire more people, invest in better technology, and go after high-income tax cheats to ensure everyone pays their fair share. As taxpayers, we can expect a more streamlined process and less frustration in dealing with the IRS.
- Investing in financial literacy is more important than ever due to the pandemic and inflationary pressures.
- High school is a prime time to teach personal finance, which includes budgeting, investing, avoiding high-risk debt, and evaluating insurance needs.
- 17 states offer a full semester course in personal finance, and 26 states have active bills aimed at addressing personal finance education needs.
- It is crucial to have confident, well-trained teachers and to monitor the financial services industry for transparency and fairness.
- Financial literacy is a shared responsibility among policymakers, parents, educators, and the financial services industry.