Treasury seeks more funding for IRS on Tax Day

WASHINGTON — As millions of Americans race to finish filing their tax returns Monday, the Biden administration made another plea for Congress to give the IRS more money.

The call for funding to modernize the agency and beef up its enforcement staff comes as IRS and Treasury Department officials have complained that they are facing an extraordinarily challenging tax season because of staff shortages and the complexity associated with distributing pandemic relief money. The Biden administration’s proposals to provide the IRS with $80 billion over a decade have thus far fallen flat in Congress.

“The IRS knew walking into this filing season that it did not have the workforce or technology in place to serve the American people the way they deserve — to pick up the phones when taxpayers call, to help them access all the credits and benefits to which they are entitled, and to ensure that each and every taxpayer receives their refund quickly,” Natasha Sarin, Treasury’s counselor for tax policy, wrote in a report about Tax Day.

Sarin said the IRS had collected more than 130 million tax returns from individuals and businesses this year and had disbursed more than $220 billion in refunds. The average refund, as of the week of April 8, was $3,175.

Taxpayers who received a portion of the child tax credit in advance last year could receive smaller refunds than they expected.

The agency started this tax season buried in a backlog of more than 20 million tax returns from previous years, leaving many taxpayers frustrated about delayed refunds.

The IRS has been holding job fairs with the aim of hiring 10,000 new employees to clear the backlog by the end of the year.

Despite the Biden administration’s continuing push for more money for the agency, it was not clear if that proposal would make it into any legislation that Democrats could pass. Republicans have staunchly opposed providing the IRS with more funding.

Sarin said the IRS continued to be bogged down by antiquated technology and thin resources. She said a lack of funding was fueling a $600 billion annual “tax gap” of revenue that is going uncollected and leaving the entire tax system in a state of distress.

“It is a tax system where ripped paper returns are literally pieced together with Scotch tape,” Sarin wrote. “Ultimately, it is the IRS that is stuck with short-term salves for much deeper trauma.”