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TaxWatch: Yellen: IRS will staff up customer-service phone lines for tax season, now that it has $80B from Inflation Reduction Act

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Treasury Secretary Janet Yellen announced one of the Internal Revenue Service’s immediate spending priorities Thursday now that the tax agency has secured $80 billion in funding: more people to pick up the phone when stumped taxpayers call next tax season.

The $80 billion earmarked for the IRS through the newly-enacted climate, tax and healthcare spending bill (dubbed the Inflation Reduction Act) is supposed to pay for a lot of improvements at the agency, including more auditors aimed at corporations and rich taxpayers, as well as technology upgrades for an agency bogged down by too much paper.

Additionally, the IRS is planning to hire 5,000 additional customer service representatives, Yellen told IRS employees as she continues trying to sell the benefits of the Inflation Reduction Act to the public.

Extra phone operator staffing should cut in half the average 30-minute wait times taxpayers experienced this past tax season to 15 minutes, Yellen projected.

In many recent tax seasons, IRS call reps were able to speak with fewer than two in 10 callers, as measured by an internal metric called “level of service.” Next year, the IRS wants to push that level of service up to 85%, Yellen said.

By early March, taxpayers tried to call the IRS almost 36 million times; 7.4 million of those calls were answered by automated responses, while IRS employees answered 2.7 million of those calls, according to a report from the Treasury Inspector General for Tax Administration.

There are lots of areas where the beleaguered, backlogged tax agency could use more people and more money, experts say. Extra customer service was a very visible example, they noted. The IRS lost more than 8,600 customer service representatives between 2010 and 2020, according to previous comments from Tony Reardon, national president of the National Treasury Employees Union.

The IRS still has to unveil its specific plans on how it will use the $80 billion in supplemental funding over the next decade. When Senate Democrats broke down how the money would be earmarked, they said $3.1 billion would go to “taxpayer services” while $45.6 billion would go toward enforcement. Roughly another $25 billion would be for operations support and nearly $5 billion would go for “business systems modernization.”

Upcoming IRS hires would also aim to fill ranks at taxpayer assistance centers offering face-to-face help, Yellen said. Of course, the IRS has to vie for workers in a tight labor market. It’s a challenge IRS Commissioner Charles Rettig has previously noted.

IRS phone service representative jobs begin in a federal job pay band that has base pay stretching from $31,083 to $40,407, according to an IRS spokesman. Actual pay bands can start at higher points, depending on the cost of living where a person is hired. For example, in the pricey New York City metro area, the same pay band starts at $41,981.

Yellen spoke Thursday at an IRS facility in New Carrolton, Md., a site where most of the 7,500 employees have IT-related jobs, according to a Treasury Department official.

The facilities were an example of the modernization that the IRS has sorely needed for a long time — and should be poised to receive with the new funding, Yellen noted.

Next tax season, to help streamline tax processing, the IRS plans to automate scanning for millions of tax returns filed by paper, Yellen said.

The IRS is still wading through a backlog of tax returns that accumulated partly because of office closures earlier in the pandemic, a wave of new responsibilities for the agency such as sending out stimulus checks, and outdated business operations.

The backlog was down to 8.2 million unprocessed returns as of late August, the agency said. Approximately 6.5 million of that sum are paper returns awaiting review, processing and refunds to filers if they overpaid. Another 1.7 million need errors fixed or special processing. The plan is to fully process the backlog by the end of the year, Rettig has previously said.

On Thursday, Yellen took a thinly-veiled swipe at some Republican critics who, in the lead to the Inflation Reduction Act’s passage, mischaracterized the IRS hiring plans as efforts to bring on 87,000 more auditors to menace taxpayers up and down the income ladder.

The 87,000 number was an estimate from a 2021 Treasury Department report that also backfills many existing workers slated to retire in coming years. Meanwhile, while future hiring plans and their precise numbers will include extra auditors geared at rich households and corporations, it will also include an array of other staffers, such as telephone center operators.

The fiery rhetoric has prompted IRS worry about worker safety. The tax agency is now checking its safety and security measures, Rettig said late last month.

On Thursday, Yellen told IRS workers, “I want you to hear from me: that especially amid the recent rise in deeply unfair and dangerous misinformation and threats, there is nothing more important to me than for you to be able to do your critical job for the American people.”

Republicans kept up their criticisms as Yellen spoke. “Instead of attempting to relieve the pressures of inflation, securing our border, or protecting citizens from criminals, Democrats voted to unleash a horde of IRS agents to audit American families and small businesses,” said a Thursday morning tweet from Senate Republican Leader Mitch McConnell’s office.

: Dan Shar sees growth ahead as newly named president of Investor’s Business Daily and MarketWatch

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