WASHINGTON — IRS Commissioner Danny Werfel has a message for high-net-worth tax fraudsters who falsely deduct private jet trips and otherwise shortchange the government on their taxes: Pay your fair share so that “others don’t bear the burden of funding our government.” .”
He also has an idea for everyday taxpayers delaying the inevitable with less than a month to go in tax filing season: “Get it done.” (And double-check your work.)
Werfel, who will reach one year at the helm of the IRS in April, said in a wide-ranging interview with The Associated Press that the agency will expand its hunt for high-net-worth tax evaders with new initiatives in the coming months. and uses tools like artificial intelligence to detect abuse and battle sophisticated scammers.
That doesn’t mean the IRS has undergone a complete image makeover. There is still a lot of criticism, including from Republican lawmakers who accuse the agency of heavy-handed action.
“We’re kind of like the NFL referee: If we get the call right or wrong, we get booed, and we’re okay with that,” Werfel said.
But efforts to tackle high-wealth tax fraud are starting to hurt, he says, and that should mean more money coming in to fund the government.
“It has an impact,” Werfel said. Large corporate filers and others “are noticing that the IRS is stepping up our scrutiny, and I think this will inevitably result in increased compliance” – and revenue.
Werfel is promising better service to taxpayers this year as he works to repair the agency’s image as an outdated and maligned tax collector. But it’s a tall order for a federal agency that even he has called “iconically unpopular” with the American public.
“We have some myths to bust,” Werfel said, referring to alarmist and inaccurate Republican claims that the agency plans to hire 87,000 armed officers ready to harass middle-income earners.
“That’s not true,” he said. “We hire telephone assistants armed only with telephone headsets. We hire accountants armed only with calculators.”
Werfel took over an agency that was understaffed and drowning in unprocessed tax returns after decades of underfunding.
Shortly before he arrived, the IRS received an $80 billion infusion under the Democrats’ Inflation Reduction Act passed in 2022. But the Republicans wasted that money.
Last year’s debt ceiling and spending deal between Republicans and the White House resulted in a $1.4 billion withdrawal from the agency and a separate agreement to take $20 billion from the IRS over the next two years and divert those funds to other programs. And last January, a debt ceiling deal aimed at preventing a government shutdown pushed back the entire $20 billion cut to this year.
Werfel is in a race against time to show how improvements to the agency can benefit taxpayers. He said the agency’s priorities include improvements in customer service, such as answering phones more quickly and making sure the wealthy “pay their fair share.”
The agency is also piloting a program that will allow people to file their taxes directly with the agency, without the help (or cost) of private commercial software.
Werfel said more than 50,000 people in twelve states have started using the new Direct File system to pay their taxes. The free online tool is available to people with very basic W-2s and who claim a standard deduction on their federal income taxes.
The rollout of Direct File has caused some consternation among commercial software companies like Intuit, as well as among Republicans who argue that free archiving programs already exist.
But so far, says Werfel, “people are telling us they found it quick and easy, and everyone certainly loves that it’s free. And their No. 1 question is: Will we get this again next year?”
Werfel sounds optimistic, but does not want to give an answer yet about the future of the program.
Overall, Werfel says, the agency has added “more tools to IRS.gov in the last two years than in the previous 20” to make tax filing easier. Wait times for answering phone calls are two minutes or less.
Werfel sat for an interview in an auditorium at the IRS headquarters in Washington, where he said sustainable financing is critical to making up for past shortcomings. He said IRS employees are “passionate about helping taxpayers. And if we don’t have the funding to give them the tools or the training, they’re angry because they can’t do enough to help taxpayers.”
Major new initiatives in recent months include an aggressive pursuit of wealthy earners who don’t pay their full tax obligations, such as people who improperly deduct personal flights on corporate jets and those who don’t file returns at all.
Private jets in particular are a place where “a lot of companies are sloppy with their accounting,” he said. Werfel said the agency’s crackdown there “sets the tone for the American people” that everyone must pay what they are owed.
Werfel said the agency has also put a new focus on “being accessible, answering the phones, keeping our walking centers open and updating our website so people can do more things with the IRS without ever leaving their smartphones or tablets.”
Yet, he admits, the agency is still not where it needs to be technologically.
There is still a working payphone in the hallway of the IRS building.
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See all of the AP’s tax season coverage at https://apnews.com/hub/personal-finance.