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In honor of Tax Day, the Treasury Public Affairs office sent out a press release entitled, “The IRS doesn’t have what they need to serve Americans well—Congress can help.” In this press release, the department pleads poverty, insisting that the Internal Revenue Service’s problems are attributable to a lack of funding. In reality, new IRS funding would simply reward incompetence and irresponsibility.   

The IRS has proven time and time again it cannot spend responsibly and complete the most basic of tasks. The agency needs reform, not more money and more power.    

The Treasury’s press release insists on $80 billion in funding over the next 10 years, a plan Democrats included in their Build Back Better Act: 

The prescription for the agency going forward is clear: the IRS needs stable, long-term funding. $80 billion over the course of the next decade will finally give the IRS the capacity to modernize and invest in a 21st century workforce. The result will be a much smoother experience for the American taxpayer, where filing is easier, and processing is automated. It will be a fairer and more equitable tax system, with the agency able to collect from top-earning evaders who currently skirt their responsibilities.” 

Ironically, the department highlighted a plan in which almost all new funding goes to enforcement, not the primary focus of their press release: modernization and taxpayer services. Under Democrats’ plan to supersize the IRS with $80 billion, funding for audits, investigations, and other tax enforcement would be 23 times greater than funding for taxpayer education and assistance. The plan would fund 1.2 million more annual IRS audits; about half will hit households making less than $75k. 

Out of nearly $80 billion in new IRS funding, $44.9 billion, more than half, would go directly towards enforcement. The agency will receive a comparatively meager $1.93 billion in funding for taxpayer services, which include things like pre-filing assistance and education, filing and account services, and taxpayer advocacy services. 

Inevitably, this funding would exacerbate the IRS’s harassment of taxpayers and small businesses. 

However, even if the funding actually went towards taxpayer services and modernization, the agency’s problems would still exist, as their problems are a result on incompetence, not a lack of funding. 

Several audit reports have demonstrated the agency’s inability to do its job regardless of funding level: 

  • For 40 years the IRS has tried and failed to update its main computer system. Regardless of funding level and regardless of who controls the White House and Congress, the bureaucracy is simply unable to pull it off. ATR compiled a list of key news articles documenting the IRS failure, starting in 1982.  
  • A Treasury Inspector General for Tax Administration (TIGTA) report on the 2021 Filing Season found that almost 40 percent of printers were not working at tax processing centers in Ogden, Utah and Kansas City, Missouri. However, in many cases the only thing wrong with the printers is that no employee had replaced the ink or emptied the waste cartridge container: “IRS employees stated that the only reason they could not use many of these devices is because they are out of ink or because the waste cartridge container is full.”   
  • In June 2021, it was revealed that the private tax files of thousands of Americans – covering a period of 15 years — had been stolen and given to a progressive news organization, ProPublica. The IRS and the Biden administration immediately vowed to investigate and prosecute. To this day, there are still no answers from the government.
  • In 2021, despite having funding for new hires, the IRS only achieved 37 percent of their hiring goal. They had trouble onboarding new hires as well, as it was “difficult to find working copiers (as noted previously) to be able to prepare training packages.”
  • In 2016, the IRS lost track of laptops containing sensitive taxpayer data. TIGTA estimates that the IRS had failed to properly document the return of 84.2 percent, or more than 1,000 computers due to be returned by contract employees.
  • A TIGTA report in 2017 showed that the IRS rehired more than 200 employees who were previously employed by the agency, but fired for previous conduct or performance issues.
  • According to the National Taxpayer Advocate’s 2014 Annual Report to Congress the IRS was unable to justify spending decisions. As the report stated: “The IRS lacks a principled basis for making the difficult resource allocation decisions necessitated by today’s tight budget environment.”
  • The agency has repeatedly failed to compile legally required tax complexity reports. These reports are supposed to contain the IRS’s specific recommendations on how to make the tax code easier to comply with. Since 1998, the IRS has done so just twice – in 2000 and 2002.   
  • In 2015, the IRS was spending $1,000 an hour hiring a litigation-only white shoe law firm for an investigation, despite having over 40,000 employees dedicated to enforcement efforts.
  • In 2015, the agency has been caught red-handed wasting taxpayer dollars on Nerf footballs, the world’s largest crossword puzzle, extravagant $100 dollar lunches, and more. 

As Norquist wrote in one op-ed, “The IRS should not be rewarded for failing to reform, failing to obey the law, failing to fire those who break the law, and spending tax dollars to act as the enforcer for a partisan political machine.” 

While the IRS continues to blame poor performance on budget reductions, countless reports point to the real problem – the inability of the agency to competently complete basic tasks and spend taxpayer dollars in a responsible way.