Taxpayer Advocate Urges Congress to Reconsider IRS Funding Boost

The Taxpayer Advocate Service, an independent arm of the IRS, said this week that the agency’s $80 billion funding boost authorized by Congress last year is too skewed toward enforcement and doesn’t address the needs of U.S. taxpayers.

Of the $80 billion in additional IRS funding, enacted as part of the Inflation Reduction Act last year, nearly $46 billion was allocated to enforcement and $25 billion is for operations support. By contrast, only $3.2 billion was allocated for taxpayer services and $4.8 billion for modernizing the agency’s business systems.

“This failure to provide sufficient funding for Taxpayer Services and BSM [Business Systems Modernization] is unwise for two reasons,” said Taxpayer Advocate Erin Collins in a blog post. “First, the top tax administration priority now should be to improve taxpayer service, particularly after the struggles of the last few years, and to do that, the IRS needs more funding in the Taxpayer Services and BSM accounts. Second, the IRS must strike an appropriate balance between serving taxpayers and enforcing the law.”

Collins added that enforcement is an essential IRS function, but said the most efficient way to improve compliance is “by encouraging and helping taxpayers to do the right thing on the front end. That is much cheaper and more effective than trying to audit our way out of the tax gap one taxpayer at a time on the back end.”