The head of the Internal Revenue Service retaliated against claims that he was breaking the law for political reasons on Thursday, warning that planned budget cuts to his department will eventually pay the federal government additional funds.
Daniel Werfel, the IRS commissioner, made these remarks during a speech before the House Ways and Means Committee as he gets closer to finishing his initial year of work. He was in charge of the tax collection agency’s $60 billion makeover. Following the Inflation Reduction Act of 2022, its funding was reduced from $80 billion, and additional cuts are being sought by Republican lawmakers.
Citing Treasury data, Mr. Werfel stated, “For each $100 million withdrawn from the I.R.S., the deficit increases by $600 million within ten years.”
The previous year, when Republicans and Democrats reached an agreement to raise the debt ceiling, they withdrew $20 billion from the Internal Revenue Service. As they negotiate with the White House on how they will pay for further help for Ukraine, they have demanded more takebacks.
The Biden administration’s plans to modernize the technology the Internal Revenue Service applies to manage tax returns and strengthen the agency’s capacity to conduct audits—which Mr. Werfel has promised will be concentrated on detailed corporate relationships and wealthy individuals—have become more uncertain due to the risk of budget cuts.
According to Mr. Werfel, the organization has improved its response to taxpayers, cleared a backlog of delayed tax returns, and strengthened taxpayer data security over the last year.
Mr. Werfel faced questions about how he ran the organization and if he had broken any tax regulations for personal gain. His decision to postpone the implementation of a controversial tax law that would have required consumers of electronic wallets and e-commerce sites like Venmo, PayPal, and Etsy to begin reporting very small transactions to the Internal Revenue Service (IRS) has drawn special criticism from Republican lawmakers.
Representative Carol Miller, a Republican from West Virginia, expressed her worries that the IRS was “just a bit too concentrated on applying political directions of the Biden administration rather than satisfying its congressionally mandated responsibilities.” Miller also convicted the agency of participating in “illegal overreach.”
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