Commissioner Rettig agrees IRS needs reform, better technology and accountability for taxpayers
April 7, 2022
WASHINGTON DC – Today, US Senator Rob Portman (R-OH) asked IRS Commissioner Charles Rettig about the delay in millions of taxpayer tax returns. Portman pointed to stories he’s heard of small businesses unable to get loans due to no tax returns being processed. Commissioner Rettig agreed with Portman on the need to address the backlog, and Portman highlighted his bipartisan work with Sen. Ben Cardin (D-MD) on IRS reform, including the Taxpayer Protection Actwhich was included in the Taxpayer First Act. Portman is currently working on authorizing customer service funding, as well as an overhaul of the individual master file and beginning to revamp the corporate master file. In addition to the IRS’s focus on customer service, Senator Portman is working to increase the amount of funding for Low-Income Taxpayer Clinics (LITCs), create an Office of Strategic Transformation of the IRS, to deploy 2D technology on paper returns to prevent future backlogs, to provide direct hire authority to help onboard employees more efficiently, and to ensure that all IRS applications have audit trails for protect taxpayer information.
A transcript of his remarks can be found below and a video can be found here.
Senator Portman: “Thank you and congratulations to you, member of the Crapo ranking, for the big vote we just had to ensure that Russia does not have access to our market; it is a privilege, not a right. As part of the low tariffs they get under the PNTR – it was a vote of 100 to nothing, and it was a vote for the people of Ukraine and for tougher sanctions against Russia. And, I know, even though it looks easy, in the end it wasn’t. So congratulations.
“Commissioner, thank you for being with us today. You and I had a good conversation before this hearing about one of my main concerns, which is that we have so many unprocessed statements. I think we’ve gone from 17.5 million unprocessed returns to a backlog of about 11 million returns. 11.5 million as of March 25. This is progress since our last meeting, but obviously we have a huge backlog. And as you know I think I’ve talked about this and I know others have raised this with you as well – we have for example small businesses in Ohio that are still waiting for their refunds from a while ago a year and a half. And we have people – individuals – saying to me “hey, I can’t get a loan because I have to be able to prove that I have a processed tax return in order to get a loan”. So that has a real impact on the world, and obviously we’re all concerned about that backlog. As you know, Senator Cardin and I have worked with you and your predecessors on IRS reform – in fact for a decade and a half or almost two decades.
“And our latest is the Taxpayer Protection Act, which was included in the Taxpayer First Act. We have another bill that we’re looking at to provide additional funding for IRS customer service that I think American taxpayers deserve, as well as an overhaul of the individual master file and to start revamping the file main business as well. We would need 2D scanning of paper returns to help prevent future delays. It basically amounts to putting a barcode on every return so you can process them much faster. Increase the amount of funding for these low-income taxpayer clinics that are currently overutilized. Provide direct hiring power to help recruit employees more effectively, which I know you appreciate. As you know, we have also revamped the Oversight Council, which was in our first legislation – the IRS Oversight Council and require regular reports to Congress and the recommendation of the Inspector General for audit trails computer on IRS applications to increase the protection of taxpayer data.
“Anyway, tell us what that would mean. Do you think this would help reduce the backlog and prevent future backlogs? And a specific question for you: “Does the current budget proposal include funding to completely update the Individual Masterfile?”
Charles Rettig, US Internal Revenue Commissioner: “The current budget proposal does not include sufficient funding to fully update the Masterfile, and this is, as you all know, a long-term project for the agency. We want, we have to get there. We are, myself included, but every employee of the Internal Revenue Service – I think every American is in favor of funding and oversight. IRS and the technology space to be able to provide the services that every American deserves, and I think the vote you all had today shows that we are the greatest country in the world. We should provide that level of service to our people. And, you know, a mix between the employees, who I think in the IRS, are spectacular, and I can’t say enough about the quality of the people and the desire. But we need to provide them with the right tools, training and technology.
“Technology will change skill sets, so direct hiring authority – what we use it for – will change as we bring technology. We will be asking, in the area of direct hire authority, for direct hire authority beyond what we just received, that is, in some of our specialist-type positions, the more sophisticated reviewers – we have a really hard time getting these people on board when they’re told it’s going to take six to nine months or something like that to get them on board. So one of the comments you made, senator, is direct hiring power in this space, and as we’ve discussed before today, you’ll get what we think is essential for us to do what we have to do.
Senator Portman: “Yes, what we talked about, we need the specific positions you need direct recruitment for, what your priorities are – and if you could just answer my original question as well, commissioner. Will these various reforms I’ve talked about, including increased funding for customer service, but also 2D scanning of paper returns and revamping the individual Masterfile, help in terms of the backlog? »
Commissioner Rettig: “It will absolutely help in terms of the backlog and many other functions within the Internal Revenue Service. It is essential that we receive this.
Senator Portman: “Awesome, well thanks for that and thanks for getting some additional information on the specific positions where you think direct hiring is most important. We want to help here, and as you said, it all depends my time is up – I’m going to ask you a question for the record on foreign tax credits, and I know you just released your final rule on this and I have some concerns and I’m going to follow with you on this. Thank you Commissioner and good luck with the filing season.