Bessent Discusses Vision for IRS, Tax Reform with Lawmakers

House appropriators questioned Treasury Secretary Scott Bessent about shifting priorities for the IRS under the Trump administration and ongoing tax reform efforts.

At a May 6 hearing, Bessent told the House Appropriations Financial Services and General Government Subcommittee that though the IRS “just concluded a successful tax filing season,” it “still needs significant reforms to deliver efficient and cost-friendly results.”

There have been some efficiency gains already, said Bessent. He cited $2 billion in cuts from the IRS’ IT budget made “without any operational disruptions.” The cuts, he explained include eliminating and revising IT and professional services contracts and addressing unused “auto-renewed licenses.”

In addition, the agency is focused on streamlining paper processing, which Bessent said cost about $450 million last year and involved nearly 6,500 full-time employees. He expects changes in progress — including increased automation — will cut paper processing costs to just $20 million per year by 2029.

Bessent explained that the IRS is “30 years behind on an IT modern modernization project where perhaps up to $50 billion of taxpayer money has been wasted.” Treasury is now “right-sizing” that project, said Bessent. “The substantial decrease in the IRS budget is largely in IT,” he added.

Budget and staffing cuts.

Some lawmakers, however, questioned Bessent on whether slashing funding and staff for the federal government’s revenue-raising agency would help reduce deficits.

Ranking Member Steny Hoyer (D-MD) agreed with Bessent that the IRS has “wasted a lot of money on IT.” But as far as any further cuts, such as those in the Trump administration’s recently released budget proposal, Hoyer asked Bessent whether a study or analysis showed they would not “sabotage collections.”

Bessent indicated that collections — along with privacy and customer service — will remain a top priority for the IRS. But amid reports that collections agents comprise a sizable portion of staffing cuts, Bessent shared that the IRS plans to “enhance collections” with AI.

“There is nothing that shows historically that by bringing in unseasoned collections agents, that results in more collections or high-end collections,” said Bessent. He likened the situation to having a junior high student do college-level coursework.

The secretary also shared that he is “reviewing the processes” for IRS audits, including “the distribution of who is audited and why they are audited.”

Among the other anticipated efficiency gains are right-sizing IRS customer service phone banks for the time of year. He called it “almost unimaginable” that the agency’s phone banks “had the same number of operators, 24/7, 365 days a year.”

It’s not just Democrats who were concerned about cuts at the IRS. Representative Steve Womack (R-AR) — referring to the Trump budget — asked Bessent, “Are there $2.5 billion worth of efficiencies?”

Bessent cited the $2 billion in IT cuts, alone. And more potential savings might come from revising how Treasury processes payments — Bessent said he’s talking to banks that have one-tenth the staff and budget for such processes.

TCJA.

Another hot topic was Bessent’s views on the forthcoming reconciliation bill to extend provisions of the 2017 Tax Cuts and Jobs Act and put into place other Trump tax promises.

Bessent told Representative Nick LaLota (R-NY) that Congress should go farther than just extending the 2017 tax cuts — adding that “making them permanent” is “a better idea.”

But to House Appropriations Committee Ranking Member Rosa DeLauro (D-CT), the $4.5 trillion in tax cuts permitted in the reconciliation bill per budget resolution instructions must be seen as what they are — debt. And that’s on top of the “$2.3 trillion” in “tax cuts to the wealthiest and the biggest corporations in 2017,” she added.

Amid Republican calls that the nation has a spending problem, DeLauro countered that what we actually have is “a revenue problem.” She critiqued Bessent and “others in the administration” for refusing to acknowledge the deficit impacts of tax cuts.

Hoyer, too, called out Bessent and the Trump administration’s plans for permanent tax cuts. “You’re not a strong supporter of paying for it,” said Hoyer, adding that “we all know if you spend more than you get, you go into debt.

Permanent cuts will be a challenge to fund, according to Hoyer. Even if “all of non-defense discretionary spending” is cut, “you won’t get there,” he said. Hoyer urged Bessent to “be honest with those with whom you work and honest with the Congress the United States in terms of the ramifications of the actions.”

Womack also questioned the secretary about the nation’s debt — in particular, the debt ceiling X date. Bessent said he couldn’t provide a firm date as paper returns from Tax Day are still being tallied.

However, “we are on the warning track,” said Bessent. But he promised that the U.S. government “will never default,” adding “we will make sure that the debt ceiling is raised.”