April 24, 2023
IRS Unveils $80B Strategic Operating Plan
Overview of the Strategic Operating Plan
The IRS released its strategic operating plan for the next decade, detailing how it plans to use the $80 billion in funding it received from the Inflation Reduction Act. Officials have said that this funding will enable the agency to transform its operations and provide increased levels of customer service to the taxpayer.
One of the main goals of the plan is to address concerns about how the extra funding will be spent. To this end, the IRS has specified three key areas where the money will be deployed: rebuilding and strengthening customer service activities, increasing the agency’s capacity to audit high-income taxpayers and complex large businesses, and updating its outdated technology systems.
According to IRS Commissioner Danny Werfel, “The plan is a bold look at what the future can look like for taxpayers and the IRS. Now that we have long-term funding, the IRS has an opportunity to transform its operations and provide the service people deserve. Through both service and technology enhancements, the experience of the future will look and feel much different from the IRS of today.”
Let’s take a look at the key parts of the IRS’s plan and how it will affect taxpayers.
Rebuilding and Strengthening Customer Service
The plan aims to rebuild and strengthen customer service activities, which is a positive step forward. Improvements in customer service could lead to fewer errors, faster resolution of issues, and a better overall experience for taxpayers. This funding has already resulted in radically shorter wait times on IRS phone lines this tax season and more walk-in services across the country.
Auditing High-Income Taxpayers and Large Businesses
The IRS plans to use the extra funding to build its capacity to audit high-income taxpayers and large businesses. The IRS commission noted that the agency is focusing its compliance efforts on individuals making $400,000 or more; he does not anticipate a change for taxpayers below that income threshold. Potential benefits of increased auditing include reducing the tax gap and ensuring that all taxpayers are paying their fair share.
Updating Outdated Technology Systems
IRS tech is said to be so “archaic” that the agency struggles to find people to work it. Perhaps most notably, it uses an obsolete programming language from the 1960s that has fallen out of popularity. The new funding allocated here allows for a complete system upgrade, with the intention of improving security, efficiency, and accuracy in processing tax returns.
Hiring New Employees
The IRS plans to hire almost 30,000 new employees over the next decade, including 5,000 customer service representatives. This hiring spree is meant to make up for ongoing attrition and the long-term decline in funding and staffing levels. As of now, the IRS has an employee count of around 80,000, which is down about 19% from the 95,000 it had back in 2010.
Overall, the operating plan has the potential to bring significant improvements to the IRS and its ability to serve taxpayers. However, there are also potential risks, especially around the areas of privacy and enforcement, that should be considered and monitored closely.
Wilke CPAs & Advisors is ready to help small business owners achieve their tax goals–while paying close attention to IRS news and developments. Contact us when you’re ready to discuss your unique tax situation.