Republican Senators Alarmed by IRS’s ‘Disproportionate’ Focus on Enforcement

Some Senate Republicans are worried that the IRS is placing an “overwhelmingly disproportionate” focus on enforcement in its latest budget requests and operating plan.

Airing those concerns at an April 19 Senate Finance Committee hearing, lawmakers grilled IRS Commissioner Daniel Werfel about his agency’s plans for the $80 billion increase in funding it is set to receive through the Inflation Reduction Act (IRA) and additional funds requested as part of President Joe Biden’s 2024 budget plan.

“Of the $80 billion provided to the IRS in the partisan IRA, more than half, or about $46 billion, is directed toward enforcement activities, while only 4 percent of the $80 billion … was earmarked for improving taxpayer services,” Sen. John Thune (R-S.D.) said.

Noting that Biden was requesting an additional $29 billion for enforcement purposes, Thune asked Werfel whether some of the “overwhelmingly disproportionate” enforcement funding wouldn’t be more effectively spent on customer service.

“I think that we actually need funds to do both,” Werfel replied. “And I worry that if we were to redirect funds out of one bucket into another, we would lose important ground that we need to cover in one particular area.”

While acknowledging that the funding appeared to be skewed, Werfel advised that the IRS currently lacks sufficient staff to handle the complex returns of high-income earners.

“The reality is that, today, we have 2,600 staff that work on high-income, high-wealth taxpayers, individuals, corporations, and complex partnerships,” he said. “There are more than 390,000 of those.

“And a lot of these filings are thousands of pages—tens of thousands of pages—and some come in hundreds of thousands of pages,” he added. “So, every dollar we move off of our efforts to build the capacity to unpack those returns means, I think, we’re leaving money on the table for the American people in terms of our ability to close the gap … of what’s paid versus what’s owed.”

Thune, accepting that some additional enforcement might be needed, said the heavy focus on enforcement just seemed disproportionate.

Operational Changes

Earlier this month, the IRS released its strategic operating plan (pdf) through fiscal year 2031, outlining significant changes to agency operations, including a greater emphasis on modernization and customer service and a shift in focus toward auditing those with complex tax filings and “high-dollar compliance issues.”

In an April 6 statement, Finance Committee Chairman Ron Wyden (D-Ore.) praised the plan for its increased focus on “wealthy tax cheats.”

“Republican budget cuts created a double standard for tax enforcement that put too much of the audit burden on working families and ushered in a golden age for wealthy tax cheats,” Wyden contended. “Democrats passed additional funding for the IRS to fix the double standard, crack down on wealthy tax cheats, and improve customer servic