NE Valley Times

Taxpayers are reportedly not seeing the promised return on investment from the billions of dollars allocated to modernize the IRS under the Democrats' Inflation Reduction Act. During a Ways and Means Oversight Subcommittee hearing, expert witnesses discussed how these funds have not effectively improved customer service or modernization efforts within the agency. The National Taxpayers Union recently graded the IRS with a "D" for its modernization efforts, despite receiving $4.8 billion in funding.

Witnesses highlighted that instead of utilizing new technologies to enhance efficiency, most of the $80 billion was spent on hiring agents to conduct more audits. This approach has resulted in outdated legacy systems still being used by the IRS, some dating back to 1959, which could pose security risks.

Projections from the Congressional Budget Office (CBO) regarding increased tax revenue have also fallen short. By the end of 2024, actual revenues were 56% less than projected. Witnesses argued that leveraging new technologies like artificial intelligence could improve customer service significantly.

Rep. David Schweikert raised concerns about low phone call response rates at the IRS: “Even with stepped-up funding…only 31 percent of phone calls were actually being answered.” Minesh Ladwa noted that adopting technology could help guide taxpayers more effectively.

The hearing also criticized CBO's projections as repeatedly inaccurate, particularly concerning revenue estimates following major legislative changes like Trump's 2017 tax cuts and recent IRS funding boosts.

Chairman Jason Smith stated: “The Congressional Budget Office has a track record of wildly missing the mark when it comes to projecting economic and fiscal outcomes." Hayden Dublois emphasized CBO’s overstated projections: “The actual ROI is less than one meaning for every $1 in revenue gained through enhanced enforcement efforts, the IRS has already spent more than $1.”

Privacy concerns were another topic during the hearing, with Rep. Beth Van Duyne pointing out leaks of confidential taxpayer data by an IRS contractor rather than external threats like DOGE: "We have absolutely seen no evidence that [DOGE] has happened."

Additionally, claims about improved customer service under President Biden's administration were scrutinized. Despite assurances from former Secretary Janet Yellen about high call response rates, Nina Olson clarified only 32% of calls reached live assisters during peak times.

Rep. Rudy Yakym summarized frustrations by quoting a report indicating misallocated resources led to neglecting other important services: "The Biden IRS allocated resources to hit ambitious but arbitrary goals that mean less than meets the eye."