AYESHA RASCOE, HOST:
President Biden has said from the beginning that he wants to go after tax cheats.
(SOUNDBITE OF ARCHIVED RECORDING)
PRESIDENT JOE BIDEN: That's why we have to rehire some IRS agents and not to do anything - not to try to make people pay something they don't owe. Just say, hey, step up. Step up and pay like everybody else does.
RASCOE: That's from September 2021. As a part of this effort, the IRS says it's actually rolling back a decades-old enforcement measure. We turn to IRS Commissioner Danny Werfel to find out why. Commissioner Werfel, thank you so much for being with us.
DANNY WERFEL: Glad to be here, Ayesha.
RASCOE: So IRS revenue officers are no longer making unannounced visits, except in a few unique circumstances. Can you talk about, what is the reason for this move?
WERFEL: Well, the main reason really boils down to the fact that we have a problem with scam artists that are posing as IRS employees. And so when people answer the door and they don't expect anyone to be there because the visit was unannounced, they're not sure at this point whether the person claiming to be an IRS revenue officer is actually an IRS revenue officer.
RASCOE: Does this run the risk of being interpreted as a pullback by the IRS because a letter or a phone call might not carry the same weight as an official standing in your doorway?
WERFEL: I don't think it should be interpreted that way. We think the best interests of advancing a better tax system is two things - better services for honest taxpayers, in particular middle- and low-income individuals that often need our help in meeting their tax obligations in a complex set of tax laws, while simultaneously doing more to make sure that wealthy individuals, complex partnerships, large corporations are paying their fair share.
RASCOE: By going after higher-wealth individuals and corporations - these are people with a lot of resources who can really fight the IRS. Doesn't that make it more difficult?
WERFEL: Look. There are roughly 400,000 filers that are our wealthiest filers. These are people that make $5 million a year or more, partnerships with 10 million or more in assets and corporations with $250 million or more of assets. Today and before the Inflation Reduction Act, we have roughly 2,600 IRS employees available to assess whether those 400,000 entities and individuals are paying what they owe. Some of these returns are thousands and ten thousands of pages. So we have to invest in new skill sets, new data tools, new expertise and more revenue agents so that we can unpack these many returns.
RASCOE: Under the Inflation Reduction Act, your agency received about $80 billion in federal funds to improve customer service, upgrade technology, crack down on tax evasion. And Congress, spurred by the GOP, took $21 billion of that back. Is that - do you have enough to do what you're saying you're going to do?
WERFEL: Well, I think there is certainly enough funds there for us to make a major change and a major shift and put a major dent into the gap that has existed. The IRS budget was consistently cut year after year for over a decade that preceded the Inflation Reduction Act. And while that period of time was going on, the world changed dramatically. We've had thousands of changes to the tax code. We have new currencies, payment platforms like PayPal, Venmo. We have the rise of the gig economy, and we fell behind. So we have a lot of work to do - a big to-do list in order to make up for those years where we fell behind.
RASCOE: Do you have a sense of how much the agency will bring in in enforcement compared to other years - say, this year or next year? Do you have any estimates of that?
WERFEL: I don't have a specific estimate. I know that, for example, the Congressional Budget Office basically scored the Inflation Reduction Act as resulting in hundreds of billions of dollars in additional revenue that the IRS is going to be able to bring in because of these efforts. I would also point out that we recently had success using Inflation Reduction Act funds to close out 175 cases against tax delinquent millionaires, and we collected $38 million in just a few months.
RASCOE: Well, what do you say to Americans who will look at cases like Hunter Biden's, the president's son's, where he's now very publicly renegotiating a plea deal on charges that involve his taxes, or Donald Trump, who said that, you know, it was smart not to have to pay your income taxes? What do you say to the average American who says the rich and powerful have a very different relationship to taxes and to a tax burden than the average person does?
WERFEL: What Secretary Yellen has directed me to do is to hold the wealthy accountable for what they owe because that's where the IRS fell behind most significantly in the period leading up to the Inflation Reduction Act - not on a new wave of audits for middle and low income but to rebuild after years of underfunding in a way that is going to benefit all Americans because, A, we're going to be able to answer the phones. B, we're going to be able to train our staff so that they can answer the latest tough questions that are coming in because of tax laws. We want your experience to be easier. And we now have the funds to invest. I think the Inflation Reduction Act provides the resources for us to build that.
RASCOE: That's IRS Commissioner Danny Werfel. Thank you so much.
WERFEL: Thank you, Ayesha.
(SOUNDBITE OF J^P^N'S "STATURE") Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
