[Congressional Record Volume 168, Number 197 (Monday, December 19, 2022)]
[Senate]
[Pages S7277-S7278]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Internal Revenue Service
Mr. GRASSLEY. Madam President, earlier this summer, my Democratic
colleagues got through on reconciliation--a strictly partisan way--a
bill that provided that the IRS would get $80 billion in mandatory
funding, which was meant to double the size of the IRS by 87,000
employees.
This additional $80 billion, which comes on top of its annual
appropriation, is over six times more than it received through annual
appropriations in 2022. Now, I expect, in the new Congress, starting
January 3 next year, there is going to be an attempt to reduce the $80
billion and not go for the 87,000 additional employees. I favor doing
just that.
However, in the meantime, the $80 billion and the 87,000 employees is
law, and so this unprecedented increase in funding demands that
Congress have a comparable increase in congressional oversight of the
IRS--exacting and unyielding oversight, to be precise. After all, we
are talking about 87,000 new employees.
To begin this oversight, Finance Committee Republicans, including
this Senator, sent a letter to the Government Accountability Office in
October in pursuit of this oversight. In that letter, we asked for
information on outstanding issues that the Government Accountability
Office has identified at the Internal Revenue Service and the status of
recommendations the IRS has failed to implement.
The Government Accountability Office responded to that letter at the
end of November, and, as you might quite expect, there are many ongoing
and persistent issues. In the November letter, the Government
Accountability Office notes that the IRS had 41 unimplemented
recommendations related to information systems control deficiencies at
the beginning of the fiscal year 2022 audit of IRS's financial
statements.
These outstanding recommendations related to information systems
control deficiencies are especially concerning given the recent
unauthorized disclosure of taxpayer information, contrary to U.S. code
section 6103, which guarantees the privacy--or is supposed to guarantee
the privacy--of your IRS information.
As you will recall, almost a year and a half ago, ProPublica, a
publication, published stories based on ``a vast trove of Internal
Revenue Service data.''
We are no closer to understanding how ProPublica obtained this
confidential taxpayer data now than we were in June of 2021. I have
sent multiple letters to the Internal Revenue Service and to the
Justice Department requesting updates on their supposed investigations
on this matter of how did ProPublica get this private information of
individual taxpayers. Yet these Agencies--the IRS and the Justice
Department--have failed to provide any information concerning how
confidential taxpayer information was disclosed or if additional
taxpayer data remains at risk.
In fact, just last week, we learned of another confirmed data breach.
The IRS inadvertently redisclosed information from tax returns filed by
tax-exempt organizations. This is after the information was already
improperly disclosed in September. The IRS clearly has a problem, then,
protecting taxpayer information, as the law requires.
Now, the 41 information system deficiencies are only a fraction of
the total open recommendations identified by the Government
Accountability Office. GAO has said that ``as of November 2022, IRS had
176 open recommendations. Fully implementing these recommendations
could significantly improve the IRS's operations.''
[[Page S7278]]
Despite IRS's shortcomings, my Democratic colleagues handed the IRS
$80 billion in additional funding without seeing its plan for the funds
or including the additional oversight. So that is why we are calling on
additional oversight. It is very important to protect this $80 billion.
Moreover, my Democratic colleagues have heavily weighted the
additional funding toward enforcement rather than updating its systems
or taxpayer services, because you can hardly call the IRS and get a
live person. If you do, you probably don't get the right answers to
your questions. So taxpayer service ought to be the No. 1 goal of this
additional $80 billion instead of enforcement.
Specifically, more than half of the additional IRS funding is
dedicated to enforcement, while less than 5 percent is for taxpayer
services. So you can see that taxpayer services isn't high on the
agenda of the IRS. The lopsided nature of the IRS funding raises
legitimate concerns of overly aggressive tax enforcement.
This is especially true given that 3.2 million tax filers are still
waiting for the IRS to process their 2022 tax returns. Countless others
are trying to voluntarily comply with the law but can't get anyone at
the IRS to answer the telephone. As a result, my office has been
flooded with calls from frustrated Iowans requesting assistance in
getting the services they need from the IRS.
This is a recipe for disaster. While serving on the 1998 IRS
Restructuring Commission, I heard firsthand from small businesses and
from individuals about the abusive tactics the IRS can use when
enforcement takes priority over taxpayer services.
Given these and other concerns, Senator Thune and I introduced the
IRS Funding Accountability Act. Our bill would place a moratorium on
IRS spending its additional funding, other than for taxpayer services,
until the IRS submits its spending plan to Congress for approval.
Congress would then have the option to reject the plan.
If Congress approves the spending plan, the IRS and the Treasury
would be subject to regular reporting requirements and incur financial
penalties for noncompliance--in other words, enhancing Congress's
constitutional responsibility of oversight to see that the money spent
is intended by Congress.
As the former chairman of the Senate Finance Committee, I understand
the necessity for enforcement. Taxpayers should pay what they owe and
not a penny less or a penny more. During my time on the Finance
Committee, I have worked to provide the IRS with additional tools to
identify tax cheats and to collect tax debts that are already due and
owed. For instance, I helped create the bipartisan IRS Private Debt
Collection Program, which uses private contractors to track down and
collect taxes owed to the IRS that they have shelved as a very low
priority.
This program has collected nearly $3 billion in net revenue since
fiscal year 2019, including over 1.3 billion in the fiscal year of 2022
alone. Every year this program has operated, it has brought more
revenue into the Treasury.
Additionally, I offered improvements to the IRS whistleblower program
in 2006. This program incentivizes whistleblowers to expose tax fraud
by corporations and high-net worth individuals. Since 2007, this
program has collected over $6 billion from noncompliant taxpayers.
Both of these proven programs initially received resistance from the
IRS. However, I appreciated former Commissioner Rettig's public support
for both of these programs.
If President Biden is really committed to closing the tax gap and
going after wealthy tax cheats, he should encourage his nominee for IRS
Commissioner, Daniel Werfel, to embrace both of these programs.
The IRS has significant and persistent issues that need to be
addressed. Congress must exercise robust and aggressive oversight. This
is especially true given the outrageous infusion of $80 billion that is
mostly geared toward enforcement against the taxpayer.
The IRS must do a better job protecting taxpayer data, provide better
taxpayer service, and use its existing enforcement tools and regular
appropriations funding more efficiently. Simply put, that is what the
taxpayers deserve.