Government abuse

IRS Is 48 Days Late To Issue Report Telling American Public How It'll Spend New $80 Billion

The agency’s new report tells us practically nothing of significance.


Last year, Treasury Secretary Janet Yellen gave the newly-enriched IRS a February 17 deadline for releasing a report detailing how the agency would use its $80 billion cash infusion—the largest in the agency's history—over the next 10 years.

The IRS, notoriously keen on imposing deadlines on everyone else, blew past its own, finally releasing the report yesterday—48 days late, for those counting.

Unfortunately, very little information of substance was contained within.

Though it's talked a big game about improving taxpayer services (customer service will soon become "world class," the agency claims), a paltry $3.2 billion will be devoted to that line item while $45.6 billion will go toward enforcement—some men with guns, but mostly auditors tasked with closing the tax gap, which is the difference between the amount owed and the amount that actually ends up in government coffers. The IRS, as of 2021, had a little under 80,000 employees; with the new cash infusion, the agency will hire almost 9,000 additional employees to work in enforcement, with another almost 14,000 in taxpayer services by the end of FY 2025.

The report contained no details as to longer-term hiring plans or how the agency intends to be sure audits don't increase for families making under $400,000 a year (assurances not provided within the text of the funding bill, which were haggled over at great length). The agency has a poor track record on this front: Earlier this year, Reason reported that the group with the highest audit rates in 2022—more than five times everyone else—were low earners taking the earned income tax credit.

The report did, however, detail plans to hire specialists who will target high–net worth individuals and big companies, as well as estate taxes and cryptocurrencies. It will be interesting to see whether the IRS can attract such professionals, or whether high–net worth individuals will better incentivize the best and brightest to help them minimize their tax burdens.

The report amusingly asserts that the IRS is on its way to becoming "digital first"—but also that "high-priority forms" won't become available online until FY 2024/2025 at the soonest. The digitalization section is filled with vague mumbo-jumbo like "implement necessary data storage requirements and best practices to retain proof of receipt and of senders' identities," with very little actual detail as to how this will be done. For high-earners who have had their data leaked and published on ProPublica's website against their will, some more detail about both data security and personnel vetting might be comforting.

"The rise in the breadth and complexity of tax administration has outpaced the IRS's ability to effectively monitor compliance, given its limited resources," the agency reminds us toward the end of the report, hitting a "keep giving us more money" note that can be found throughout.

For once, they're kinda right: The tax code includes benefits for everyone from parents to property owners. Whether it be state and local tax deductions or mortgage interest rate deductions, all kinds of people can qualify for their special little loophole.

Critics of big government might notice that the IRS has, in fact, diagnosed the problem: As the tax code gets more complex, so too does enforcement.

But there are lots of ways of solving this problem that don't involve continually upping the amount we shell out to the IRS. And, at the very minimum, if we're going to give it billions and billions of dollars, along with the stipulation that the agency communicates where the money will go, we should expect a detailed report delivered on time.

The fact that the agency couldn't even do this doesn't bode well for its big $80 billion makeover.