Personal Finance

Yellen: Republicans' IRS funding cut would hurt customer service goals

U.S. Treasury Secretary Janet Yellen outlines the improvements the IRS will deliver to taxpayers in 2024, during remarks at IRS Headquarters in Washington on Nov. 7, 2023.

Kevin Lamarque | Reuters

1. Expanded taxpayer service

2. Boosted technology

The IRS also met its paperless processing initiative goal, which allows taxpayers to electronically upload and respond to all notices.

Paper backlogs have been an issue for the IRS, and the agency estimates more than 94% of individual taxpayers will no longer need to send mail.

“The IRS will reduce errors and storage costs,” Yellen said. “And we’ll speed up processing times for the system as a whole.”

By the start of the filing season, taxpayers will be able to digitally file 20 more forms, including certain business forms, she said.

3. Limited free Direct File pilot

The IRS will also prioritize a limited Direct File pilot, available to certain taxpayers in 13 states to file federal returns for free, Yellen said.

“The pilot is an opportunity to learn,” she said. “We’ll test the taxpayer experience, technology, customer support, state integration and fraud prevention and then apply these insights as we consider scaling to more users.”

The agency is still finalizing the scope of the invitation-only pilot program, but it expects the service will include low- to moderate-income individuals, couples and families who claim the standard deduction.

IRS targets top earners with AI and machine learning

Yellen’s speech comes less than one week after the Republican-led House passed a bill to provide $14.3 billion in aid to Israel paired with equal cuts to IRS funding championed by newly elected Speaker Mike Johnson, R-La.

It’s the second time House Republicans voted to strip IRS funding in 2023, largely seen as political messaging without support from the Democrat-controlled Senate. The new bill would add $26.8 billion to the U.S. budget deficit, according to a Congressional Budget Office report.

“Playing politics with IRS funding is unacceptable,” Yellen said. “Cutting it would be damaging and irresponsible.”

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