Chairman Richard Neal and Ranking Member Kevin Brady
House Committee on Ways & Means
1102 Longworth HOB
Washington, DC 20515
RE: Professional Managers Association Statement for the Record for April 6, 2022 Hearing on “Overcoming Racism To Advance Economic Opportunity”
Dear Chairman Neal, Ranking Member Brady, and Members of the Committee:
On behalf of the Professional Managers Association – the non-profit professional association that has since 1981 represented professional managers, management officials, and non-bargaining unit employees at the Internal Revenue Service (IRS) – I write to provide a written statement for the record for the hearing on “Overcoming Racism To Advance Economic Opportunity.”
We appreciate the Committee for elevating issues of economic inequity in our nation. As several witnesses highlighted, our current tax code contributes to the inequities many Americans face. We write to provide additional information on how inequities in tax administration contribute to equity gaps. Gaps in taxpayer equity, as well as perceived gaps in taxpayer equity, erode our nation’s system of voluntary compliance and needlessly hamper the efficiency of the Internal Revenue Service.
I. Congress must ensure the IRS is equipped with the resources and mission clarity to equally enforce our tax laws against all violators at any income level.
Much attention has been given in recent months to the struggles the IRS faces due to a lack of funding. Fiscal Year 2022 appropriations provided the IRS a historic increase in funding. Unfortunately, even at $12.6 billion in funding, the IRS is still nearly $4 billion below its 2011 peak of $16.4 billion, when accounting for inflation. FY 2022 funding was also below the $13.2 billion President Biden requested. Congress’ consistent failure to properly fund the IRS has a direct impact on the equitable delivery of taxpayer services.
In the last decade, the IRS has lost over 20,000 full-time equivalent positions and had its funding slashed by over $2 billion. These cuts have dramatically diminished enforcement capabilities within the IRS.
The result is that IRS employees, with limited resources and support, audit taxpayers with simpler, easier to audit returns. These taxpayers tend to be low income and tend to receive the Earned Income Tax Credit. They also tend to be people of color. Meanwhile, high-income earners with complex tax returns are infrequently audited due to a lack of time and resources.
While the IRS does sponsor a program to provide free legal assistance to low-income taxpayers, in Mississippi, the state with the highest audit rate in the country, ProPublica discovered in 2019 that there was only one attorney for the program in the entire state.
This legal assistance program is just one example of a well-intentioned program meant to assist those in need that has failed its taxpayers due to a lack of funding and oversight by Congress.
In 2021, IRS customer service representatives (CSRs) were only able to answer 11 percent of phone calls. As a result, the National Taxpayer Advocate recently concluded, “most callers could not obtain answers to their tax law questions, get help with account problems, or speak with a CSR about a compliance notice. Among the one in nine callers who was able to reach a CSR, the IRS reported that hold times averaged 23 minutes.”
For Americans who lack the time to wait on the phone for the IRS or lack the resources to hire a tax practitioner for assistance, the chances of them receiving assistance are slim and the chances of non-compliance are high.
Adequately funding the IRS will allow the Service to refocus enforcement efforts on those most negatively impacting our tax system. Economic analysis published in November 2020 reflects that investing $100 billion over the next decade in IRS technology, data, and personnel would allow the agency to collect up to $1.4 trillion in unpaid tax revenue. Additionally, funding for customer service improvements will make the biggest difference for those who cannot afford the existing options for private tax assistance. Funding the IRS is both equitable and efficient.
II. Congress must conduct necessary oversight to ensure the IRS provides leadership opportunities to diverse populations and is conscious of equity issues impacting taxpayers.
A diverse cadre of individuals leading the IRS leads to a keener awareness of issues impacting communities of color. Unfortunately, the IRS, like much of the federal government, struggles to have diverse individuals in its leadership ranks.
In September 2020, the Merit Systems Protection Board (MSPB) reported, “African American and Hispanic employees were less likely to say that their agency did a good job of either recruiting or retaining a diverse workforce. They were also more likely than White employees to say that they had not been treated fairly in terms of career advancement, awards, training, performance appraisals, job assignments, discipline, and pay. Finally, they were more likely to say that they had been denied a job, promotion, pay increase, or other job benefit within the past 2 years because they had been discriminated against based on race.”
The MSPB described the survey results regarding disparate treatment based on race “strikingly consistent,” with African American and Hispanic employees continually agreeing that people of color within our federal workforce are being subjected to higher standard and being passed over for supervisory positions.
The IRS workforce has steadily increased in diversity over time. In a March 2021 annual report, the IRS provided the following total workforce distribution by racial and ethnic origin and gender for FY 2020:
• White – 49.11%
• Black – 28.84%
• Hispanic – 14.05%
• Asian – 6.53%
• American Indian or Alaska Native – 0.83%
• Native Hawaiian or Pacific Islander – 0.19%
• Male – 34.83%
• Female – 65.17%
Unfortunately, IRS leadership does not reflect the diversity of its workforce. In FY 2020, the IRS reports the following distribution of members of the Senior Executive Service by racial and ethnic origin and gender:
• White – 65.9%
• Black – 23%
• Hispanic – 5.8%
• Asian – 4.2%
• Male – 54.4%
• Female – 45.6%
Oversight is necessary to ensure IRS leadership is taking an active role in addressing barriers to the advancement for women and people of color within the Service. The failure to ensure a diverse cadre of employees rise to leadership levels has a direct impact on taxpayer services.
PMA learned in February 2020 that, despite mandates under both Title VI of the Civil Rights Act of 1964 and Executive Order 13166 prohibiting discrimination based on national origin and requiring federal agencies to provide individuals with limited English proficiency “meaningful access to program benefits and services conducted or funded by the federal government,” as well as the reality that over 67 million American have a primary language other than English in their home, the IRS was neglecting to provide multi-lingual telephone support to domestic taxpayers. Instead, according to the EDI office’s own admission to PMA, the IRS was engaging in civil rights settlements with these individuals, allowing the Service to quietly continue failing to provide equal access to taxpayer services.
It was likely no single “racist” individual’s decision to fail to provide non-English speaking Americans with taxpayer assistance services. Rather, an unconscious bias toward English speakers and a lack of diverse voices at the Service’s decision-making tables allowed this inequity to persist. Thankfully, and to the Service’s credit, this issue has been addressed and the IRS now provides multi-lingual telephone support for domestic taxpayers as required by law.
Further, Commissioner Rettig has made it a top priority to increase taxpayers’ access to multi-lingual services. This is a significant advancement for increasing the equitable delivery of taxpayer services and demonstrates that positive and rapid change is possible when pressure is placed on leadership to elevate issues of diversity and equity. It also illustrates the necessity of ensuring diverse voices are heard within the IRS and each IRS leader is trained in diversity, equity, and inclusivity issues.
Congress must appropriately fund the IRS to allow the Service to rectify longstanding inequities in our practices and refocus enforcement efforts as necessary. The IRS is the primary revenue source for the entire federal government: we fund freedom. And when the IRS is lacks diverse voices and adequate funding, it is too often low income, communities of color who pay the price. We urge Congress to conduct necessary oversight to ensure the diversity of IRS leadership and ultimately fund the IRS appropriately.
Thank you for your consideration of PMA’s views on this critical topic. Please do not hesitate to contact PMA Washington Representative Natalia Castro (email@example.com) if the association can be of any assistance to you on this matter.