Welcome, everyone. The Subcommittee on Oversight meets today to review the 2022 tax return filing season and the overall operations of the Internal Revenue Service. I would now like to welcome our witness, IRS Commissioner Charles Rettig.
Chairman Pascrell regrets that he could not attend and asked me to serve as Chair this morning. He wanted the Subcommittee to hold this hearing today because it is essential that we ensure the IRS makes this a successful tax season for all taxpayers.
Mr. Rettig, thank you for appearing today. We know that this is a very busy time for you and for IRS employees, so we are especially appreciative that you were able to join us this morning. And we are grateful for the dedicated service of all IRS employees.
We are particularly interested in receiving an update on the ongoing tax season, including any recommendations you have for taxpayers or practitioners as we near the April 18th filing deadline.
The IRS has warned that there would be “enormous challenges” this filing season due to an unprecedented backlog of millions of unprocessed tax returns. Each return represents an individual, a family, or a business desperately awaiting needed refunds from last year. We look forward to hearing from the Commissioner what the IRS has done so far this year to address the backlog, and what additional tools the IRS needs from Congress.
Importantly, we must assist our constituents who have been waiting months for much-needed refunds, including individuals claiming the rebate recovery credit and small businesses claiming the employee retention credits. I recently held an event with our local taxpayer advocate, and it has been one of the highest-viewed events of the pandemic, which just goes to show how many people are looking for information and relief this filing season. And it’s not just credits and refunds.
My constituent, Bret Kennedy, has been denied an increase on his SBA Economic Injury Disaster Loan, or EIDL, because the IRS has not corrected his business return from 2019. It also took months to post his returns from 2020 and 2018, which may have never happened if my office didn't intervene. Now his business, Inspyre Home Construction, is in danger of closing because of the backlog and an IRS issue that keeps corrected returns from being posted so SBA can see them.
As a former member of California’s state tax board, I know the importance of timely, accessible service and assistance in ensuring fair tax administration. We cannot be complacent with a level of service in which only one in ten taxpayers calling the IRS is able to reach an IRS customer service representative for tax law and account answers. I recognize that the IRS received an unprecedented number of phone calls last year—nearly 300 million—and I would like to hear from the Commissioner what lessons learned the IRS is applying this filing season. That includes expanding the use of callback technology, and I look forward to hearing what is being done to expand the availability of that feature.
Further, the tax laws provide the IRS with administrative authority to address certain situations that develop during the filing season that may be unfair to taxpayers. I have consistently advocated for various tax penalty relief as a matter of fairness, particularly as taxpayers continue to face COVID-related challenges to filing their taxes. I look forward to hearing what administrative relief and actions are currently under consideration by the IRS in response to taxpayer difficulties and the backlog.
Today’s hearing is also an opportunity to learn how current funding levels are impacting IRS staffing, programs, and most importantly, taxpayers and tax administration. A decade of underfunding by those who do not value fair and full tax administration has harmed the IRS and countless taxpayers.
These impacts include:
- A tax gap of up to $1 trillion a year,
- A reliance on correspondence audits of low-income taxpayers,
- The worst telephone service levels in the history of the agency, and
- Antiquated technology that does not allow for scanning returns, secure email contact with taxpayers, and agency preparedness for now or the future.
I look forward to discussing how we can make this tax season successful, and I now yield five minutes to the Ranking Member, Mr. Rice, for his opening statement.
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