IRS Commissioner Danny Werfel has a message for the wealthy tax evaders who falsely deduct private plane travel and short-circuit the government on their taxes: Pay your fair share so that “others don’t take on the burden.” burden of funding our government.”
He also has a thought for everyday taxpayers putting off the inevitable with less than a month to go until tax filing season ends: “Do it.” (And double-check your work.)
Werfel, who will mark one year at the helm of the IRS in April, said in a wide-ranging interview with The Associated Press that the agency will expand its pursuit of tax evaders with new initiatives in the coming months. and is using tools like artificial intelligence to ferret out abuse and fight sophisticated scammers.
This does not mean that the IRS has undergone a complete image makeover. There is still a lot of criticism out there, including from Republican lawmakers who accuse the agency of overreaching.
“We’re kind of like the NFL referee: When we get the right or wrong call, we get booed and we’re fine with that,” Werfel said.
But efforts to crack down on wealthy tax evaders are starting to bear fruit, he says, and that should mean more money coming in to fund the government.
“It’s having an impact,” Werfel said. Large corporate signatories and others are “taking note that the IRS is stepping up our scrutiny, and I think that will inevitably result in increased compliance” and revenue.
Werfel promises taxpayers better service this year as he works to repair the agency’s image as an outdated and maligned tax collector. But it’s a tall order for a federal agency that he also called “iconically unpopular” with the American public.
“We have some myths to dispel,” Werfel said, referring to alarmist and inaccurate Republican claims that the agency plans to hire 87,000 armed agents ready to harass middle-income earners.
“We are not,” he said. “We are hiring telephone assistants armed only with telephone headsets. We are hiring accountants armed only with calculators.”
Werfel took over an agency that was understaffed and drowning in unprocessed tax returns after decades of underfunding.
Shortly before his arrival, the IRS received an $80 billion injection under the Democrats’ Inflation Reduction Act passed in 2022. But Republicans chipped away at that money.
Last year’s debt ceiling and budget cuts deal between Republicans and the White House involved the withdrawal of $1.4 billion from the agency and a separate deal to take $20 billion from the IRS in next two years and divert those funds to other programs. And last January, a debt ceiling deal intended to avoid a government shutdown brought forward the entire $20 billion cut to this year.
Werfel has been in a race against time to demonstrate how improvements to the agency can benefit taxpayers. He said the agency’s priorities include customer service improvements such as answering the phone faster and making sure the wealthy “pay their fair share.”
The agency is also piloting a program that allows people to file their taxes directly with the agency without the help — or cost — of private commercial software.
Werfel said more than 50,000 people in 12 states have begun using the new Direct File system to complete their tax paperwork. The free online tool is available to people with very basic W-2s and who claim a standard deduction for federal income taxes.
The launch of Direct File has sparked some consternation from commercial software companies like Intuit, as well as from Republicans who argue that free archiving programs already exist.
But so far, Werfel says, “people tell us they’ve found it quick and easy, and everyone certainly appreciates the fact that it’s free. And their No. 1 question is, will we have it again next year?”
Werfel seems optimistic, but is not yet ready to give an answer on the future of the program.
Overall, Werfel says, the agency has added “more tools to IRS.gov in the last two years than in the previous 20” to make tax filing easier. Wait times to answer phone calls are two minutes or less.
Werfel gave an interview in an auditorium at IRS headquarters in Washington, where he said sustained funding is critical to making up for past shortfalls. She said IRS workers are “passionate about helping taxpayers. And when we don’t have the funds to give them the tools or the training, they get angry because they can’t do enough to help taxpayers.”
Major new initiatives in recent months have included aggressive prosecution of those who earn a lot of money and who do not pay all their tax obligations, such as people who improperly deduct personal flights on corporate jets and those who simply fail to file any returns.
Private jets, in particular, are a place where “a lot of companies are lax with their accounting,” he said. Werfel said the agency’s crackdown “sets the tone to the American people” that everyone must pay what they are owed.
Werfel said the agency has also focused on “being accessible, answering the phones, keeping our walk-in centers open and updating our website so people can do more with the IRS without ever leaving their smartphone or tablet”.
Even so, he admits, the agency is still not where it should be technologically.
There is still a working pay phone located in the hallway of the IRS building.