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Rettig Asks Congress For More IRS Funding To Boost Compliance

By Dylan Moroses · October 7, 2020, 3:01 PM EDT

Lawmakers should consider increasing funding for the Internal Revenue Service's enforcement efforts by raising the program integrity cap and allow the agency to regulate return preparers to help improve compliance rates, IRS Commissioner Chuck Rettig said Wednesday.

Congress could also pass legislation to enhance the IRS' ability to correct errors for taxpayers who may claim tax credits and improve electronic filing requirements, Rettig said during a meeting of the House Subcommittee on Government Operations. Those efforts would require consistent, multiyear funding approved by Congress but would result in significant improvements for the IRS, Rettig said.

"We will do more with the assistance of Congress," Rettig said.

In July, the House passed an appropriations package that included a $12.1 billion budget for the IRS for fiscal 2021, a more than $600 million increase compared with the prior year's figures. It remains pending in the U.S. Senate, where lawmakers have yet to consider the House-passed funding measures.

The House's funding bill would allow the IRS to improve its systems and work efficacy, Rettig said. He highlighted that Congress already passed information technology improvement provisions that were a part of legislation passed last year called the Taxpayer First Act , but noted that those improvements have not been funded yet. Rettig also said the agency's own IT modernization plan, unveiled in April last year, is separate from the initiatives included in the act and also requires multiyear funding.

The agency's six-year IT modernization plan calls for streamlining communications, updating existing agency IT systems and creating new online services to reduce administrative costs and bolster cybersecurity. It would require between $2.3 billion to $2.7 billion over the six-year span, according to the IRS.

The act mandated that the IRS make a host of administrative changes to improve customer service and its technology, such as the creation of online taxpayer accounts. The law also overhauled the agency's appeals process.

Rettig told Senate lawmakers earlier this year that a report detailing the proposed IRS reorganization as required by the act would be delayed a few months in the wake of processing returns and distributing stimulus payments during the novel coronavirus pandemic.

The panel's chair, Rep. Gerry Connolly, D-Va., asked Vijay D'Souza of the Government Accountability Office to report back to the subcommittee with specific numbers detailing the IRS' inventory of computers and how old they are, as well as how many legacy IT systems are currently in service. Connolly also asked GAO to provide lawmakers with dollar amounts reflecting how much funding would be required to modernize the agency's IT systems.

D'Souza said during the hearing that the older IT systems at the IRS are more costly to maintain, and are becoming increasingly more difficult to find staff to operate them because the coding languages they are built upon aren't typically used in modern systems.

During the hearing, Republican and Democratic lawmakers also expressed their concerns with how the inadequate staffing and antiquated IT systems at the IRS have negatively affected the agency's ability to process tax returns and distribute economic impact payments during the pandemic.

The panel's ranking member, Rep. Jody Hice, R-Ga., said, like his committee colleagues, he has constituents who are still waiting for their tax refunds and the up to $1,200 payments that were authorized in March as part of the Coronavirus Aid, Relief and Economic Security Act,  passed to address the economic downturn caused by the pandemic.

Rettig said that he would look for ways to improve communication between lawmakers and the agency to better serve those requests that committee members have received from constituents who haven't received their stimulus checks. It remains difficult for the agency to quantify how many people haven't received their stimulus payments who don't typically interact with the IRS, according to Rettig.

The commissioner also provided an update on the backlog of mail that the IRS currently faces, telling lawmakers that the agency is processing roughly 1.3 million pieces of mail per week and still has about 5.3 million pieces of mail backlogged. The IRS is prioritizing processing returns among the backlog of mail, but they continue to receive up to 500,000 additional pieces of mail per week, which prolongs the agency's ability to catch up with its taxpayer correspondence, Rettig said.

In August, the IRS announced that it would temporarily suspend the mailing of tax delinquency notices to those with balances due as it works through its backlog of mail.

--Additional reporting by Joshua Rosenberg. Editing by Neil Cohen.

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