The IRS did not submit its 10-year plan detailing how it will use the $80 billion appropriation from the Inflation Reduction Act (PL 117-169) by the February 17 deadline as directed by Treasury Secretary Janet Yellen.
“The IRS has been working to prepare the Strategic Operating Plan requested by the Secretary,” the agency told Checkpoint in a statement. “The IRS expects to deliver the plan to the Secretary in coming weeks.”
On August 17, Yellen in an internal memo sent to then-IRS Commissioner Chuck Rettig instructed the agency to deliver the plan to her six months from the day of the inflation bill’s enactment. She retained the deadline originally included in a prior version of the bill that would have statutorily required the IRS to outline how the resources will be used over the next decade. That requirement, Yellen wrote, was removed through the so-called Byrd rule as provisions were finalized in negotiations.
“I would like the IRS to work closely with the deputy secretary to identify specific operational initiatives and associated timelines that will improve taxpayer service, modernize technology, and increase equity in our tax system of tax administration by pursuing tax evasion by those at the top who today do not pay their tax bill,” read Yellen’s directive.
Critics of the funding are concerned about the ratio of enforcement amounts compared to other purposes, such as customer service, systems upgrades, and supporting operations. Of the $80 billion, over $45 billion is set aside for capturing tax revenues that would otherwise go uncollected and contribute to the tax gap, the amount of estimated collections left on the table each year.
Although lawmakers, policy groups, and the public alike circled February 17 on the calendar, an IRS official in January implied that the plan would not be ready in time. At a virtual conference hosted by the California Society of Enrolled Agents, IRS Wage and Investment Division Commissioner and Chief Taxpayer Experience Officer Ken Corbin told tax professionals that the inflation bill will better how taxpayers and practitioners interact with the IRS. A special office was established to facilitate this and is in effect as of this filing season.
“We also plan on releasing this spring, a detailed report outlining how the inflation Reduction Act will help improve services going ahead over the next 10 years, but also … how we’ll transform this agency in 2023 and beyond,” said Corbin.
With “spring” being the operative word, this may have been an early indicator that the plan would not be ready on time. It remains unclear how far along in the process the IRS is in its development, but Daniel Werfel said February 15 at his confirmation hearing before the Senate Finance Committee to be the next IRS commissioner that he would as head of the agency support its public release in the interest of transparency and collaboration with Congress.
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