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IRS budget hike under fire in House spending panel

A provision in the government's 2024 budget request that would earmark roughly $43.2 billion for the tax collection agency brought objections from lawmakers.

WASHINGTON (CN) — House Republicans grilled Treasury Secretary Janet Yellen on Friday over a multibillion-dollar cash injection for the Internal Revenue Service outlined in the Joe Biden administration’s 2024 budget proposal.

Yellen appeared before the House Ways and Means Committee less than a day after the White House released its spending plan, which included roughly $43 billion in funding for the IRS — $14 billion in annual budget as well as $29 billion for enforcement and operations costs.

Incensed about the proposed funding increase, Committee Chair Jason Smith accused the Treasury Department and the IRS of falling short of their core mission, pointing to what he said was a historic backlog of tax refunds and poor customer service at the agency.

“After a two-year inflation crisis that has cost American workers more than two months of pay, families need every penny they can get,” the Missouri Republican said.

Smith also questioned Yellen about how the IRS was using the $80 billion or so that had been authorized for it under last year's Inflation Reduction Act.

The treasury secretary responded that the agency had hired 5,000 new customer service representatives in an effort to improve its ability to answer taxpayer questions. IRS agents have answered thousands more phone calls during the current filing season than at the same time last year, she said.

In-person tax assistance centers that had been closed due to lack of resources are also in the process of reopening, Yellen noted. “Anyone this tax season attempting to get help from the IRS is experiencing a very different environment,” the secretary added.

As for the White House’s proposed IRS budget hike for 2024, the Treasury Department plans to submit information about how it will employ that funding in the coming weeks.

Smith also expressed concern about the ongoing investigation into the security of the IRS’ stores of confidential information, spurred on by a 2021 report from ProPublica in which the publication was able to obtain a package of the agency’s taxpayer data.

“You’ve been asked about this issue several times in public,” Smith told Yellen. “You always note that you’ve referred the matter to the [Treasury Department] inspector general and the Department of Justice … but this is not an issue that can be referred elsewhere and then completely ignored.”

Yellen said she shared the congressman’s frustrations.

“I would really like to get to the bottom of this,” the secretary said. “We care deeply about taxpayer privacy, and an unauthorized disclosure of taxpayer information is illegal and something to be taken very seriously.”

Yellen explained that the Treasury Department had taken the appropriate steps to look into the matter by bringing it to independent investigators. The agency is not responsible for setting the timelines of those inquiries, she added.

“I am waiting to see, just as you are, the outcome of these investigations,” Yellen said.

The secretary did not say whether the Treasury Department had conducted its own audit of IRS data security, or whether it would do so.

Meanwhile, Ways and Means ranking member Richard Neal lauded the administration’s proposed spending increase for the tax authority, saying that Democrats’ investment in the agency was already making progress.

“The IRS was severely underfunded,” the Massachusetts Democrat said. “Now, with the infusion of Democratic support, 99.7% of returns are being processed, and more Americans are getting the service that they deserve.”

Categories: Financial Government National

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