ICYMI: Warren Makes the Case for Increased Funding for the IRS and Calls on the Administration to Commit to Creating Simplified Filing Tools
Warren’s Tax Filing Simplification Act would require the IRS to provide its own free tax filing software, and take other steps to make tax filing easier and cheaper
Washington, D.C. – In case you missed it, at yesterday’s Senate Finance Committee hearing, United States Senator Elizabeth Warren (D-Mass.) made the case for increased funding for the Internal Revenue Service (IRS) through the Build Back Better Act and called on the administration to create the simplified filing tools proposed in her Tax Filing Simplification Act. Corporate lobbyists and anti-tax extremists have slashed the IRS budget by 20% over the past decade, leaving the agency with 22% fewer staff and decades-old IT systems, and forcing it to outsource key capabilities to profiteering private companies. Years of underinvestment in the IRS, compounded by pandemic-related challenges, have left the agency ill-equipped to assist the majority of Americans with basic tax filing needs and chase down wealthy tax cheats. Americans waste an average of 11 hours and $200 preparing their tax returns, and they still risk getting it wrong and suffering months of IRS processing delays. With simplified filing, they could plug in IRS data, take a look, maybe make a tweak or two, and then send it in minutes, instead of hours.
Erin Collins of the National Taxpayer Advocate confirmed to Senator Warren that an error on a return could mean that a taxpayer may have to wait 10 months before they even receive their refund. Collins also told Senator Warren she would like the IRS to make the data they have available to taxpayers for downloading to make filing tax returns more efficient. Collins also agreed that a simplified filing tool, as proposed in Senator Warren’s Tax Filing Simplification Act, would help increase tax return accuracy because the IRS has information on W-2s, 1099s, and any credits. This would decrease the IRS backlog and increase processing times for taxpayers.
Senator Warren said that “it’s past time to put hardworking Americans first.” She is fighting for robust IRS funding in the Build Back Better Act and urging the administration to commit to simplified filing tools as proposed in her Tax Filing Simplification Act. In addition to the hearing, yesterday, 35 groups called on the Biden administration and the Department of Treasury to immediately simplify tax filing.
Senator Warren has led the call for investments in the IRS. Last month, Senators Warren and Jeff Merkley (D-Ore.) led a letter calling for increased IRS funding as Americans prepare for the 2022 tax filing season. In May 2021, Senator Warren introduced the Restoring the IRS Act of 2021, which would provide the IRS with the resources it needs to crack down on tax dodging by the rich and corporations by providing mandatory funding and strengthening information reporting. In April 2021, during a hearing exchange in the Senate Committee on Finance, IRS Commissioner Rettig agreed with Senator Warren on the need for increased IRS funding. In 2019, Senator Warren reintroduced the Tax Filing Simplification Act, which would require the IRS to provide its own free tax filing software, and take other steps to make tax filing easier and cheaper.
Transcript: Spotlighting IRS Customer Service
U.S. Senate Committee on Finance
Thursday, February 17, 2022
Senator Elizabeth Warren: Thank you, Mr. Chairman. So, even before the pandemic hit, the IRS was in trouble. Corporate lobbyists and anti-tax extremists have slashed the IRS budget by 20% over the last decade, leaving the agency with 22% fewer staff and decades-old IT systems, forcing it to outsource key capabilities to profiteering private companies. Now this means that the IRS can’t chase down wealthy tax cheats, or adequately assist the majority of Americans trying to honestly fill out their taxes and claim refunds. And this filing season, with ongoing pandemic-related challenges, let’s face it: it is worse than ever.
This has to end. We need to invest in the IRS. And today I’d like to highlight a key investment we can make – simplified filing – and how it would help address precisely the kinds of rampant delays that taxpayers are facing this year.
Right now, the IRS is advising taxpayers to file electronically and accurately in order to avoid delays.
So Ms. Collins, as National Taxpayer Advocate, you know that taxpayers have a lot to keep track of when they’re filing their taxes, from W-2 income to advance Child Tax Credit payments to the pandemic stimulus checks. What happens if a family makes an error on their return and doesn’t get the number exactly right?
Erin M. Collins, National Taxpayer Advocate, Internal Revenue Service: Yeah, that is a challenge that the IRS dealt with last year that has caused part of the backlog, is the numbers that a lot of individuals, over 11 million, put on their stimulus, did not match the IRS’s records.
Senator Warren: Right, so what happens when there’s a mismatch?
Ms. Collins: So they pull it out of the processing, and they send the IRS, or notices again, they send the taxpayer a notice, the taxpayer gets to respond, and it does slow the process down. So it is a real challenge and some of those are still sitting out there 10 months later.
Senator Warren: Yeah, 10 months later that people could still be sitting out there.
So here’s the thing that gets me about this, though. The IRS actually has all this data – from the employers who tell the IRS how much the employees made each year, or from the IRS’s own data on how much it sent to families in those CTC payments or stimulus checks. But even though it already has the information, the IRS quizzes the tax filer to make sure that the tax filer can accurately enter that information. And if the numbers don’t exactly match exactly, then it’s lose-lose – the taxpayer faces huge delays, as you point out, the IRS wastes resources taking a second look at the return, and falls further behind in helping everyone else.
So, Ms. Collins, if the IRS already has this information on taxpayer income, why doesn’t it just give it to the taxpayers? Wouldn’t it make the returns more accurate, and processing much faster?
Ms. Collins: Yeah, this past year what the IRS is doing is sending out two letters, one on the advance Child Tax-
Senator Warren: Yeah, I get the letters, why don’t they just push out the information?
Ms. Collins: I am a big proponent of the online account, and I very much woud like the IRS to have that data available, and the taxpayers could access it, possibly set it up to download it, to go directly into a taxpayer's return, or to provide to their CPA or their accountant.
Senator Warren: Okay, so now we’re speaking each other’s language on this. This is precisely why I have proposed in my Tax Filing Simplification Act that the IRS invest in its IT systems so that taxpayers could download their IRS data directly into tax prep software. Right now, Americans waste an average of 11 hours and $200 preparing their tax returns – and they still risk getting it wrong and waiting months and months for their returns. With simplified filing, they could plug in IRS data, take a look, maybe make a tweak if they think there’s something that’s not right there, and then send it in – in minutes, instead of hours.
So, Ms. Collins, do you think that the IRS should commit to creating this kind of simplified filing tool – allowing taxpayers to download their data from the IRS right into tax filing software?
Ms. Collins: It’s definitely something I would recommend they look into because they do have the W-2 information, 1099 information, any of the credits that the IRS has paid out, and it would simplify it for taxpayers. And I’d also, I’m a big proponent of simplifying everything on taxes.
Senator Warren: Good, me too. And I agree with you on this, but we have to remember there’s somebody who doesn’t agree. There are giant corporations like Intuit that hate this idea, because they rake in billions of dollars each year by tricking taxpayers into buying unnecessary tax preparation products. There are also right-wing extremists who want an IRS that can’t serve folks at the bottom, and can’t reach tax cheats at the top.
So, my view on this, it’s time to put hard working Americans at the center of our tax policy, simplify, make it easier, let them be able to pay their taxes and move on with their lives. We can’t put Americans through another bad tax filing season, so thank you very much.
Thank you, Mr. Chairman.
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