May 30, 2024
Dear Chairman Joyce and Ranking Member Hoyer:
On behalf of the Professional Managers Association – the non-profit professional association that has, since 1981, represented professional managers, management officials, and non-bargaining unit employees at the Internal Revenue Service (IRS) – I write regarding funding for the IRS in FY 2025.
During this past filing season the IRS demonstrated to Congress and the American people that with adequate investment our dedicated employees will deliver a smooth and successful filing season. This past filing season, the IRS demonstrated its capability to deliver a smooth and successful filing season with adequate investment. The IRS processed over 160 million individual tax returns, delivering most refunds within 21 days for those who e-filed and selected direct deposit. Customer service improved significantly, with phone wait times averaging three minutes, an 88% level of phone service, more calls and electronic questions answered than ever before. The IRS also assisted more taxpayers in person while expanding free filing options and improved digital tools on IRS.gov. The IRS has also been able to make progress on critical IT modernization, customer service improvements, and hiring efforts through multi-year funding provided by the Inflation Reduction Act (IRA). These advancements made a real difference for millions of taxpayers this season and all Americans will reap the benefits as our government improves its fiscal state through IRS revenues.
Despite these successes, the IRS still faces a long road toward full modernization. Over a decade of declining investments and personnel reductions have caused significant damage. Congress recognized this with the IRA multi-year funding. PMA supports the Biden administration’s funding request for additional multi-year IRS modernization funds to prevent future service and capability shortfalls starting in 2026. We urge Congress to continue recognizing the connection between customer service and appropriate investment in the IRS.
I. Ongoing Investment in Customer Service and Modernization by Congress
There is no denying the frustrations millions of Americans and businesses have felt in recent years when interacting with the IRS. During this time, IRS employees too have been frustrated with the quality of agency operations and the inability to properly service taxpayers. However, thanks to resources provided by Congress in recent years, the IRS is already beginning to make critical improvements to taxpayer services and business operations.
PMA supports the Biden Administration’s IRS request of $12.3 billion for funding in FY 2025 for IRS operations.
The President’s budget also includes other critical requests to strengthen the capacity of the Treasury Department. PMA supports the administration’s requests for additional cybersecurity funds and to enhance the capacity of Departmental offices. All IRS human capital policies must be approved by the Treasury human capital leadership, reinforcing the importance of enhanced capacity of Treasury Departmental mission enablement offices.
PMA also supports the budget’s request for ongoing personnel authorities, to ensure IRS has the staff with the right skills in place during this time of transformation. One provision would extend the IRS’s Direct Hire authority through FY2027 to fill positions with a “critical hiring need” and for which there is a “severe shortage of qualified candidates.” The other provision would extend through FY2031 the IRS’s authority to offer higher base salaries to recruit and retain up to 200 employees with skills deemed critical to the achievement of the strategic operating plan goals.
II. Implementing the Inflation Reduction Act (IRA)
Passage of the IRA by Congress provided the IRS with a much-needed stable, long-term investment for staffing, technology upgrades, and improved taxpayer services. The IRS must be able to implement the law. PMA believes transparency and accountability with Congress is essential both to build trust with the IRS and to identify additional necessary improvements.
Luckily, the IRS has begun using funds earned through the Inflation Reduction Act (IRA) to meet critical staffing needs, upgrade technology, and improve taxpayer services. The IRS has been transparent as it utilizes this funding. Last year the U.S. Treasury Inspector General for Tax Administration (TIGTA) released an oversight tracker to ensure the IRS is accountable to Congress and the American people as it uses this investment.
We encourage Congress to recognize that the continued success of IRS operations relies on adequate investment and attention. The IRA funding is demonstrating the benefits of long-term investment, but this funding is for the long-term, not the near-term. Adequate annual appropriations funding is also necessary in this fiscal year to ensure the IRS can execute its responsibilities without dipping into IRA funds to keep basic operations afloat. The fact that IRS has been forced to do this in the two years since IRA funding has been approved makes clear that the IRS has been allocated insufficient resources to execute its responsibilities in recent years.
Only maintaining IRA funding for long-term modernization in addition to stable funding for this fiscal year will ensure the IRS is able to successfully serve the American people now and well into the future. For these reasons, we urge Congress to maintain the $12.3 billion funding level for the IRS, as well as additional long-term modernization funding. We recognize a divided Congress means compromises must be made, but compromises that undermine the effectiveness of the tax administration system will only negatively impact both taxpayers and government revenues.
The Taxpayer Advocate noted her view that the IRA does not properly prioritize funding for Taxpayer Services and BSM accounts. We at PMA agree with the perspective that dedicated funding is required to improve taxpayer services. We urge Congress to provide specific funding for these accounts, instead of forcing the IRS to reprogram IRA funds. The Taxpayer Advocate’s idea that Congress could allow the IRS to reallocate funding across its four core accounts, within certain parameters, may provide a balance of agility and oversight and is worth exploring further.
III. Conclusion
The IRS is the primary revenue source for the entire federal government. Without revenue from the IRS, it is impossible to fund any other federal program or agency initiative; NASA cannot send astronauts to Mars or the Moon, the Department of Veterans Affairs (VA) cannot serve our nations veterans, and the Social Security Administration (SSA) cannot process retirement or disability payments. Put simply, the IRS funds freedom.
PMA is hopeful that a divided Congress can still find a way to fulfil its basic constitutional obligations in funding the government during this fiscal year. We urge Congress to continue working together to ensure sufficient funding for the IRS now and well into the future. Cuts to the IRS budget today will mean more calls next year from your constituents complaining they cannot get the customer service they deserve.
Please contact PMA Washington Representative Jason Briefel (jbriefel@shawbransford.com) if we can be of further assistance. Thank you for your consideration of PMA’s perspective.
Sincerely,
Kelly Reyes
Executive Director
CC: Members of House Committee on Appropriations, Subcommittee on Financial Services and General Government
