Investor Alert

Feb. 19, 2021, 10:12 a.m. EST

IRS chief says tax-collection bureau is having ’15 minutes of fame’ — and here’s how he’s hoping to make the most of it

Watchlist Relevance

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

By Andrew Keshner

That’s Internal Revenue Service Commissioner Charles Rettig on Wednesday night offering his assessment of the tax-collection agency he’s led since 2018, which became a critical cash conduit for millions of people during the pandemic.

After Congress approved two rounds of relief and stimulus checks, first in March and then in December, the IRS was the agency that sent the money out to Americans.

Between the first and second batches of checks, the IRS released approximately 307 million direct payments for a combined $412 billion.

Now, lawmakers are chewing over President Joe Biden’s $1.9 trillion rescue package, which proposes a third round of checks for $1,400 — a sum reflecting what Democrats, ultimately joined by then-President Donald Trump, hoped to send out to most Americans minus the $600 that was shipped out. If the proposal quickly becomes law, the IRS would have to dish out the checks while processing 2020 income-tax returns. (The IRS can do both, Rettig has previously said.)

Through it all, lawmakers have lauded the IRS for the stimulus check turnarounds, but they’ve also griped about problems like the backlog in processing hard-copy 2019 tax returns after the IRS temporarily shut down operations during the spring. As of late January, the agency was still processing 6.7 million 2019 returns, according to an IRS official who said the agency needs more information from the people filing the returns at issue.

Speaking to tax attorneys at the New York City Bar Association, Rettig — a tax lawyer before his appointment to lead the tax bureau — said he hopes the IRS’s potential moment in the sun translates into hard, cold cash. As in more budget money. “I think you’re going to see funding for the IRS. You’re going to see radical increases in staffing for the IRS over maybe the next three years,” he said.

During the late December flurry of activity on the $900 billion rescue package and budget, the IRS ended up with a 3% increase in funding coming off a $11.51 billion budget in fiscal 2020.

Extra money, some say, is long overdue.

Since the 2010 fiscal year, the IRS budget dropped roughly 20% over a span of 10 years when adjusted for inflation, according to a report from national taxpayer advocate Erin Collins, who operates as a watchdog within the IRS. Staffing levels have also fallen nearly 20% in that same time as the amount of tax returns increased by 13%, she added.

“The IRS deserves much credit for its overall performance in 2020,” Collins wrote, but, she added, the agency can only do so much.

During fiscal 2020, the IRS received 100.5 million telephone calls, and staffers answered 24% with an average wait of 18 minutes, she said. “Put differently, IRS employees did not answer more than 75 million telephone calls from taxpayers seeking help in complying with their tax obligations,” Collins wrote, noting the IRS routed 23 million calls to automated responses, and 39 million callers hung up.

So is the IRS actually having a moment? Maybe, but the full picture isn’t clear yet, said Howard Gleckman, senior fellow at the Tax Policy Center.

Part of the sunny disposition goes with the territory of leading a massive tax-collection operation. “This is an agency everyone loves to hate. You’ve got to look at the bright side of everything and Mr. Rettig is a very optimistic guy,” he said.

Still, Gleckman added, “I think IRS deservedly won a lot of kudos for distributing the [economic impact payments] twice. … I think there will be bipartisan support for addition funding. I’m not sure how much more.”

Congress specifies how the budget money is put to use, so Gleckman said it’s an open question what the end result of extra funding would be — and what that means for taxpayers.

To be sure, there’s room for improvement at the IRS in important matters like low and declining audit rates and customer service, Gleckman said.

When it comes to customer service, Gleckman said, “It’s been bad for years, and it’s gotten far worse. You simply cannot communicate with the IRS in any way,” he said.

On Wednesday night , Rettig noted that he’s got his eye on the taxpayer experience with matters like broader language access and customer service. There are 15,000 IRS customer-service representatives, Rettig said. Those spots are now completely telework-eligible, he said. Just 3% of those spots were telework-eligible at the pandemic’s start, he said.

This Story has 0 Comments
Be the first to comment
More News In
Personal Finance

Story Conversation

Commenting FAQs »

Rates »

Partner Center

Link to MarketWatch's Slice.