An increase in income tax rate means you'll pay a higher percentage of your income to the government. This directly reduces your disposable income, the money you have left after taxes for spending or saving. This can make it harder to afford basic necessities, save for retirement, or invest in your future.
IRS Commissioner Danny Werfel explains how the agency is focusing on wealthy tax dodgers and corporate compliance this year while working to improve online, telephone, and in-person assistance for taxpayers.
It’s tax season, the time when hundreds of millions of Americans have a new item on their to-do list by getting ready to file. The to-do list at the IRS has also expanded: We have a historic new assignment to reimagine and rebuild an IRS that makes the process of meeting your tax responsibilities much easier, faster, and more secure.
At the IRS, we know we need to do more—this tax season and beyond. That’s why our focus has been on using the historic Inflation Reduction Act funding to make improvements in three areas: taxpayer service, compliance, and protecting taxpayers and the tax system from scams and fraud.
In the area of service, we’re focused on helping taxpayers get it right the first time and avoid the need for back-and-forth engagement to fix errors when filing returns or claiming credits and deductions. We want taxpayers to interact with us seamlessly in whatever way works best for them—on the phone, in person, or online.
To improve in-person service, we continue to expand our Taxpayer Assistance Centers nationwide. Inflation Reduction Act funding has allowed us to open or reopen 50 TACs and bring on more than 850 new TAC employees. Our goal is for TACs to offer 8,000 more hours of in-person assistance this filing season than they did last tax season.
Those who choose to interact with the IRS online deserve the same functionality in their digital IRS accounts that they have with their banks or other financial institutions. We’ve expanded the capabilities of the IRS Online Account, so this filing season, taxpayers can do more types of transactions in those accounts.
And we’re taking important steps toward our ambitious long-term goals of giving taxpayers the ability to file all documents securely, respond to all notices online, and securely access and download their data and account history. Enhanced paperless processing means taxpayers can send all correspondence, non-tax forms, and responses to notices digitally, enabling up to 125 million paper documents to be submitted digitally per year.
Another important long-term goal for us in the years ahead involves letters sent by the IRS. We’re working to simplify the notices that taxpayers receive, which can cause confusion—forcing recipients to call the IRS or their tax professional—and potentially causing them to lose out on credits or deductions they’re eligible for.
Simplifying these core communications can help reduce the burden on everyone by freeing up resources to help other taxpayers.
A central part of the IRS’s mission is to meet taxpayers where they are and ensure they have options to fulfill their tax obligations. This year, we’re conducting a special Direct File pilot that will let people in 12 states file tax returns electronically directly with the IRS for free.
This would be another choice for taxpayers who already have a variety of ways to file their tax return, including using a tax professional, tax software, or the IRS Free File program. The Direct File pilot will allow us to further assess customer and technology needs and evaluate and develop solutions to meet taxpayers’ needs in years to come.
In the area of compliance, you’ll see us continuing to take swift and aggressive action to ensure high-income taxpayers with issues pay what they owe. We continue to place increased scrutiny in this area as we work to reverse the historically low audit rates for large corporations, complex partnerships, and high-wealth individuals.
A key area of focus is on millionaires and billionaires who evade taxes. These efforts are concentrated among taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. Over the past year, the total we’ve recovered through these new initiatives is $520 million, and that’s just the beginning.
We’re also expanding compliance efforts related to the largest US corporations and partnerships. Funding from the Inflation Reduction Act allows us to hire the accountants, data scientists, and other specialists who can unpack these complex returns, find any issues that exist, and hold these corporations and partnerships accountable for what they owe.
The third area we’ve been focusing on is protecting taxpayers and the tax system from the growing threat of scams and schemes. As commissioner, I believe it’s a top priority for the IRS to be on the side of taxpayers, and I want to make sure we’re doing everything we can to warn and protect taxpayers when issues appear.
These are just the first steps in a multiyear effort at the IRS. The added funding covers a decade, and the agency will be working to build on the momentum of the past year and this tax season.
In the months and years to come, taxpayers can expect to see an IRS that’s easier to navigate, with more ways to access the information they need with expanded online tools and live assistance. While we’re seeing continued improvements, it’s important to recognize that some changes will take years to realize after decades of underfunding.
Through our actions and improvements, our plan for investing this historic Inflation Reduction Act funding is simple: If you are middle or low income, new IRS funding will mean better service; if you are a high-income taxpayer with a tax issue, new funding will mean more scrutiny.
Our tax system depends on trust and integrity, and I’m committed to using it to make long-term, sustainable improvements that support a fair tax system for all.
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