Chair Ron Wyden and Ranking Member Mike Crapo
Senate Finance Committee
219 Dirksen Senate Office Bldg
Washington DC, 20510
Re: Written Comments for April 7, 2022, Hearing on “The IRS, the President's Fiscal Year 2023 Budget, and the 2022 Filing Season”
Dear Chair Wyden and Ranking Member Crapo:
On behalf of the Professional Managers Association (PMA) – 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 urge the Committee to support robust and timely appropriations for the IRS.
PMA vehemently supports the White House’s request for a $14.1 billion in funding for the Service with $310 million dedicated for systems modernization. When Congress allocated $12.6 billion for the IRS in FY 2022, PMA applauded the historic investment in the IRS and the bipartisan recognition of the IRS’ financial constraints. However, we also level set expectations: 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.
Ranking Member Crapo is correct to point out that the IRS, despite funding, has failed to modernize its technology systems in a meaningful way. However, the culprit for this inefficiency is closer to home than the Senator assumes.
The IRS cannot modernize under the current broken appropriations process. Congress passed three continuing resolutions prior to passing FY 2022 appropriations, passed the measures five months late, and Congress is now scheduled to appropriate FY 2023 funds in just six months. The IRS cannot enact long-term plans to modernize its IT system when it is unsure what funding it will have in six months.
The constant inability of Congress to fund the government adequately and on time has widespread ramifications on long-term planning, mission delivery, and taxpayer services. Each year when Congress delays appropriations, the IRS is placed in a continuing resolution state where the Service is deeply cautious and limited in its spending. The IRS also cannot conduct robust hiring, onboarding, and training while on a continuing resolution. This makes employees less equipped to handle the tax season and leads to more frustrations for taxpayers.
Most recently, this Committee expressed frustration that the IRS has not yet fully spent the $1 billion allocated in the American Rescue Plan Act (ARPA). As the National Taxpayer Advocate Erin Collins explained, this discrepancy boils down to the consistency of funding. Each time Congress fails to pass appropriations, the IRS must cautiously couch funding to ensure it can continue functioning if additional funding does not materialize. Congress’ inability to pass consistent and timely appropriations makes long term planning, and execution of those plans, impossible.
For example, when Congress passed ARPA, it passed IRC Section 6428B. The provision says: "$1,464,500,000 to remain available until September 30, 2023 for necessary expenses for the Internal Revenue Service for the administration of the advance payments, the provision of taxpayer assistance, and the furtherance of integrated, modernized, and secure Internal Revenue Service systems, of which up to $20,000,000 is available for premium pay for services related to the development of information technology as determined by the Commissioner of the Internal Revenue occurring between January 1, 2020 and December 31, 2022, and all of which shall supplement and not supplant any other appropriations that may be available for this purpose."
In prior years, the IRS had to raid its personnel budget to fund IT overages, and it seems likely the IRS is spending these funds cautiously because other modernization dollars might not materialize and, if they do not, the IRS will need the $1 billion for "the furtherance of integrated, modernized, and secure Internal Revenue Service systems" which, again, they have all the way until 2023 to spend.
In our view, the IRS is being responsible – it spent a third or so in FY21, perhaps it will spend a third or so this year rather than raid personnel budgets and leave the balance for FY23. The IRS is not hiding this money in a rainy-day fund – Congress specifically authorized the agency to hold the money. To its credit, the IRS is currently deploying those funds to help mitigate its historic backlog. We are proud of the agency for making more than 2,500 job offers in the past month.
PMA ultimately agrees that the IRS must have robust plans for onboarding new employees, addressing the backlog, and modernizing the IT systems. But Congress’ failure to pass timely and robust appropriations stifles all these plans.
Further, the Committee’s focus on 2D barcode scanning, while helpful, is misplaced. It is true the IRS’s IT must be updated and 2D barcode scanning would be an element of that modernization. But it is a drop in the ocean. Most of the IRS’s paper “kryptonite” will not be alleviated by 2D scanning, especially considering our outdated computer system will not likely integrate with most modern scanners. This also assumes that the agency’s paper burden is primarily original tax returns – tax returns are the smallest component of the IRS’s service-wide paper inventory. The IRS needs real investment and real long-term solutions, not band aids or a piecemeal approach.
For these reasons, PMA support multi-year funding dedicated to IRS technology modernization. All IRS technology needs a facelift, not just our scanning systems. The IRS is the largest revenue source for the federal government – simply put, we fund freedom. Yet, the IRS’s aging IT infrastructure does not reflect the IRS’s critical role in our nation.
There is not a single federal lawmaker who has been working for 61 years – there should not be an IT system that has been working for that long without modernization. Our nation should not rely on technology that predates Hawaii statehood, the Berlin Wall, and the Space Needle. Dedicated, multi-year funding for IT modernization would allow the Service to take consistent steps toward improvement isolated from Congress’s annual appropriations panic.
Only with consistent, robust, and timely funding can the IRS truly improve the quality of taxpayer services for all Americans; therefore, we urge the Committee to support our call for dedicated, multi-year funding for IRS technology.
Thank you for your consideration of PMA’s perspective. Please contact PMA Washington Representative Natalia Castro (firstname.lastname@example.org) if we can be of further assistance on these matters or provide addition insights on the issues facing the IRS.