Q&A: IRS Oversight Protects Taxpayers

Q&A: IRS Oversight Protects Taxpayers

With U.S. Sen. Chuck Grassley

Q: How is the IRS measuring up in service to the American taxpayer?

A: When Iowans contact my office for help with a federal agency, it often involves a problem they are having with the Internal Revenue Service (IRS), from getting questions answered in a timely manner or receiving an expected refund from a tax return, and more. As a taxpayer watchdog, I spearhead efforts to protect taxpayer rights and strengthen taxpayer services at the IRS. Listening to feedback from Iowans informs my work at the federal level, including when I served on the National Bipartisan Commission to Restructure the IRS. After holding a dozen public hearings, including a field hearing in Des Moines, I pushed to implement reforms that were included in landmark legislation enacted in 1998 called the IRS Restructuring and Reform Act. We identified key issues bogging down operations at the IRS, from antiquated computer systems to a dysfunctional culture spoiling the agency's mission to serve the American taxpayer. More recently, as chairman of the Senate Finance Committee I led the Taxpayer First Act enacted in 2019. This legislation was the culmination of a bipartisan, bicameral effort to modernize the IRS and continue to protect taxpayer rights. Among other achievements, this legislation created a truly independent office of appeals, required the IRS to better assist victims of identity theft, and curtail enforcement abuses that had led to the IRS seizing assets without any underlying criminal activity.

As former chairman of the tax-writing Senate Finance Committee, I'm working to put the brakes on an emerging activist agenda poisoning the waters at the IRS. This mindset weakens confidence in the fair administration of federal tax laws and undermines our system of voluntary compliance. From the inappropriate targeting of certain conservative groups during the Obama administration to unprecedented leaks of sensitive taxpayer information in the Biden administration, I'm pushing to clean up the mess at the IRS. In January, the nonpartisan National Taxpayer Advocate released its annual report mandated by Congress to analyze IRS operations from one year to the next. Among the most serious problems identified in the report: extreme backlogs and processing delays impacting millions of taxpayers; insufficient telephone and in-person service, live assistors answered only 29% of total calls in fiscal year 2023; identity theft, victims of tax-related identity theft waited nearly 19 months in 2023 to have their returns processed and refunds received; inability to hire, recruit and train IRS personnel; and, poor operational efficiency for appeals, resulting in prolonged dispute resolution for taxpayers. Despite enactment of the Taxpayer First Act and other legislation, continuous and diligent oversight of the IRS is necessary to ensure the IRS is carrying out the law as intended.

Q: What did you ask the IRS Commissioner at the recent Senate Finance Committee hearing?

A: The IRS Commissioner testified the day after Tax Day to answer questions about the IRS budget and tax filing season. Through the first week of April, the IRS processed more than 100 million individual tax returns. Tens of millions of Americans rushed to get their returns filed by April 15, or filed extensions due Oct. 15. As many burned the midnight oil during tax season, I'm reminded both the current and former Taxpayer Advocate have said customer service, rather than enforcement, is the best way to close the tax gap to help Americans file their taxes and pay what they owe.

And yet, the Biden administration pushed for $80 billion in new IRS funding, outside of the regular appropriations process, that was included in the partisan, so-called Inflation Reduction Actin 2022 that largely beefed up enforcement measures, and has requested an additional $104 billion in funding, with more than half directed towards more enforcement. I pushed to sharpen congressional oversight teeth to hold the IRS accountable on how it spends the money. Despite claiming IRS audits wouldn't target taxpayers making less than $400,000 a year, reports show most new audits targeted taxpayers earning below $200,000. Congress later rescinded $21.6 billion as the Biden administration struggled to put its money where its mouth was.

I also pressed the IRS Commissioner to do a better job protecting taxpayer information and whistleblowers who come forward. Every American who files their tax return, from the President of the United States to a small business owner in Iowa, ought to have full confidence their sensitive information is protected and secure from snoops and wrongdoers. As a longtime champion for whistleblowers, I urged the IRS Commissioner to fix the backlog that makes whistleblowers wait up to 10 years or more to receive monetary awards they are entitled to for blowing the whistle on tax cheats. Whistleblowers stick out their necks and put their livelihoods on the line to report fraud. The IRS Whistleblower Program I shepherded through Congress has recouped $6 billion and counting. It's a proven and effective tool to smoke out tax cheats whose underpayments force law-abiding taxpayers to pick up the slack. At a recent Senate Budget Committee hearing, I explained how good tax policy is a better approach to shrink the tax gap. Bad tax policies that increase complexity and undermine competitiveness for American companies do not grow revenue or shrink tax evasion.

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