Treasury Secretary Janet Yellen praised the notion of filing taxes via text message in a Thursday speech delivered to IRS employees in Maryland while championing the $80 billion funding boost for the agency recently passed by Congress.
“Tax filing should be simple,” she said. “I recently came across a statistic that it takes an average American 13 hours to file a tax return. Compare that with Sweden. There, some taxpayers can file simply by replying to a text message. We can and must do better.”
Her remarks come as the IRS works to deliver a report to Congress on how it could set up a free, direct e-filing tax return system. Democrats’ Inflation Reduction Act (IRA) stipulated that the agency has nine months to deliver the report.
Tax experts say that such a system could resemble widely available commercial software products that lead taxpayers through the process of filling out their tax returns, or it could send taxpayers pre-populated forms that they would simply need to approve.
Yellen said that she would “convene industry-leading customer service experts from the private sector to make sure we hear their perspectives on the IRS modernization effort.”
“We recognize that customer service in the future will look differently than customer service today,” she added.
A large segment of the $80 billion will go toward modernization of the agency, which has been using long outdated technology for decades, including some software languages that date back to the earliest phases of computing.
Yellen praised IRS software developers for converting more than 200,000 lines of Assembly Language Code to the more modern Java programming script.
Republicans have been up in arms about the $80 billion in new funding for the IRS, arguing that added staffing will result in more auditors going after working Americans and small businesses.
“They’re not being created to audit billionaires or giant corporations. They’re being created to audit you,” Sen. Ted Cruz (R-Texas) said on the Senate floor in August.
Yellen in her speech again made the case that the intended target of increased enforcement at the IRS is wealthier Americans and big business.
“I’ve directed that enforcement resources will not be used to raise audit rates for households making under $400,000 a year relative to historical levels. In fact, we expect audit rates for honest taxpayers to decline,” she said, adding that “high earners are paying far less than they owe.”
“The top one percent of Americans was estimated to owe over a fifth of unpaid taxes – totaling around $160 billion,” Yellen said. “Data shows that less than half of all taxes from more complex sources of income are paid. Yet nearly all taxes due from wages and salaries – which are earned by ordinary Americans – are paid.”
In an interview with The Hill, newly appointed IRS Whistleblower Office Director John Hinman said that his department is looking forward to having more resources to better carry out its work.
“It’s a very exciting time,” Hinman said. “We’ve been asking for additional resources for many years.”
“There’s a lot of change coming, I think. To be here now where there’s an opportunity to have the resources we’ve been wanting for many years, it really is exciting,” he added.