Yellen Warns Republicans’ IRS Funding Cuts Could Undermine Customer Service Goals, According to Reuters

By David Lawder

WASHINGTON – U.S. Treasury Secretary Janet Yellen announced on Tuesday that the Internal Revenue Service (IRS) will be able to electronically accept 20 additional tax forms by early 2024. However, she cautioned that potential cuts to the tax agency’s funding by Congress could hinder its modernization efforts and improvements in customer service.

Speaking at the IRS headquarters in Washington, Yellen reiterated the agency’s commitment to answering 85% of taxpayer calls, aiming for an average wait time of five minutes or less.

Yellen highlighted the importance of enhancing customer service at the IRS as a central argument for last year’s $80 billion investment over the next decade aimed at strengthening tax collection, audits, and updating outdated systems. The goal of reducing call waiting times represents a significant improvement from the 2022 tax season, where calls were answered only 10-15% of the time, with an average hold time of 30 minutes.

Republican legislators have expressed longstanding opposition to the expanded IRS budget and are advocating for a $14.5 billion cut to fund aid for Israel. This comes less than six months after a debt ceiling agreement previously reduced planned IRS investments by around $20 billion over a decade.

The Congressional Budget Office projects that the spending cuts from the Israel aid bill could increase the U.S. budget deficit by $27 billion over ten years due to decreased audits and tax compliance, which would reduce federal receipts.

Yellen remarked, "Playing politics with IRS funding is unacceptable. Cutting it would be damaging and irresponsible. The IRS collects 96 percent of the federal government’s revenue. This funding enables our country to protect national security, provide social security and healthcare, and invest in our nation’s infrastructure, among other key priorities."

In terms of progress, the IRS estimates that its paperless processing initiative means that 94% of individual taxpayers will no longer need to send paper documents. For the 2024 tax filing season, the IRS will allow 20 additional tax forms to be submitted electronically, resulting in approximately 4 million more paperless submissions, including widely used business forms.

Additionally, the IRS has opened or reopened 50 taxpayer assistance centers with the new funding and will increase their operating hours by 8,500 hours in 2024.