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Max Stier is the president and chief executive officer of the nonprofit, nonpartisan Partnership for Public Service.
Paying taxes is like paying a visit to the dentist: We might not like doing it, but deep down we know we need to. Among other things, our federal taxes fund national defense, health care for veterans, loans to small businesses, critical repairs for crumbling road and rail bridges, and responses to national emergencies like the COVID pandemic.
During the past decade, the pain associated with paying taxes has increased greatly due to the inefficiencies of the Internal Revenue Service. Customer service fell into the abyss because the agency has been starved for resources, understaffed and reliant on outdated technology.
As the federal tax filing deadline approaches on April 18, the IRS appears to be at the beginning stages of a major overhaul that promises improved customer service and more efficient tax administration. Time will tell, but the signs are hopeful.
Danny Werfel, the newly minted IRS commissioner, has promised speedier processing of tax returns, an end to long taxpayer wait times on the phone, more digital tools to obtain service and information, expanded online accounts that will reduce written correspondence, and more staff to monitor high-income tax filers and corporations.
Werfel can make those promises in part because of a landmark law that funds the IRS for the next decade at much higher levels than in the past. In a world where agencies often don’t know if their budget will last the next few months, this is a game changer.
Between 2010 and 2022, Congress cut the IRS budget by 19 percent (adjusted for inflation), bringing predictable results. Customer service floundered: at one point, the IRS was sitting on a correspondence backlog of 5 million items and answering just 9 percent of phone calls. Lack of funds held back modernization of the agency’s key tech stack components, some dating back to the Kennedy administration. Hiring freezes have left an aging workforce, with only around 6 percent of IRS employees under age 30.
Most damaging, it’s been open season for tax cheating. According to Werfel’s predecessor, Charles Rettig, the value of unpaid taxes is now around $1 trillion annually — enough to fund the annual budget of the Defense Department and still have money left over to help reduce the deficit.
Efforts in Congress are still afoot to claw back some of the increased IRS funding, which would be a huge mistake. While big versus small government is a legitimate matter for debate, effective or ineffective government is not.
Already, the IRS has begun to chip away at its mountain of unanswered communications. It is picking up its phones with more regularity. It is gearing up to go after well-heeled tax dodgers. But following years of declining faith in government, the IRS has an opportunity to do much more, a true transformation.
Crucially, the service must work to change its relationship with the American public. In addition to simply being more responsive, it should be using more electronic communication while also investing more in data security, soliciting more feedback, and using data to improve its operations continuously over time. It should refresh its workforce with a new generation of diverse talent.
The IRS also must present a more human face to the outside world. It is practically unique among large agencies in that it has virtually no political appointees, consisting almost entirely of career civil servants. I know from my work with the Partnership for Public Service that the vast majority are conscientious professionals, dedicated to their mission.
Take for example the team of Virginia Busby, Dianne Garibotto and Camille Privett. At the start of the COVID pandemic, they led the design and implementation of a system to distribute economic relief payments to 160 million Americans.
In contrast to the usual narrative of government sluggishness, they delivered more than half of those payments within just two weeks of authorization. They helped millions of families stay afloat at one of the toughest times in our recent history. We need to see and hear more stories like that.
An effective state, as political scientist Francis Fukuyama has written, is one of the pillars of representative government. But it’s not enough for our government merely to be effective. It must also be trusted by the people it serves. With the political and fiscal stars aligned in its favor, the IRS has a once-in-a-lifetime chance to start shoring up faith in our democracy.
