In a compelling speech on Tuesday, Treasury Secretary Janet Yellen stood up for the Internal Revenue Service (IRS) and criticized Republican proposals to cut its funding. Yellen stated that playing politics with IRS funding is unacceptable and that reducing it would have damaging and irresponsible consequences.

The Democrats' Inflation Reduction Act, passed last year, allocated a significant $80 billion to the IRS. These funds were specifically intended to enhance efforts to crack down on tax cheats and improve taxpayer service. However, the allocation of funds has become a politically contentious issue.

Most recently, House Republicans voted to rescind $14.3 billion from the IRS in order to provide emergency aid to Israel after the recent Hamas terrorist attacks. Nonetheless, the bill is unlikely to move forward for a vote in the Democrat-controlled Senate.

House Speaker Mike Johnson defended the IRS cuts by suggesting they would offset the spending for Israel. However, independent budget experts have consistently warned that diverting funds from enforcement actions by the IRS will ultimately contribute to the deficit. The nonpartisan Congressional Budget Office also revealed that cutting $14.3 billion from the IRS would lead to a decrease in tax revenue collection totaling $26.8 billion over the next decade.

Since gaining control of the chamber in January, the House GOP has made multiple attempts to reclaim some IRS funds. Some representatives have even advocated for abolishing the agency altogether. Earlier this year, Republicans successfully rescinded $20 billion from the IRS as part of a deal addressing the debt ceiling.

Critics argue that the IRS will primarily target middle-class taxpayers and small business owners with the allocated funds. However, the Biden administration assures taxpayers that those earning less than $400,000 a year will not face increased taxes as a result of the new funding.

IRS Commissioner Danny Werfel echoed Yellen's sentiments in a speech delivered on Tuesday, asserting that the agency's agenda is aimed at providing better service to middle- and low-income taxpayers while intensifying scrutiny on the wealthy.

The Biden administration is keen on showcasing how the new funding is positively transforming the IRS's taxpayer services and enforcement efforts. Notable accomplishments include a significant increase in call answering capacity and a substantial reduction in phone wait times. The addition of 5,000 new customer service representatives allowed the IRS to answer 3 million more calls during the 2023 filing season, with wait times now at an average of three minutes instead of 28.

Moreover, through heightened enforcement targeting millionaires, the IRS has successfully collected $160 million in back taxes. The agency has already met its 2023 goal of allowing taxpayers to respond to all correspondence online, eliminating the need for paper-based responses. As a result, over 94% of individual taxpayers can now interact with the IRS digitally.

To further streamline processes, the IRS plans to digitize all paper-filed tax returns by 2025, effectively cutting processing times in half and expediting refund issuance by four weeks.

Additionally, the IRS intends to enhance its online tool, "Where's My Refund?," providing taxpayers with more detailed information about the status of their refunds and any further actions required by the IRS.

Looking ahead, the IRS is set to expand its in-person tax filing support at Taxpayer Assistance Centers, aiming to provide free help to an additional 50,000 taxpayers during the 2024 filing season.

While these advancements aim to reduce the need for taxpayer calls, the IRS has also implemented a call-back option for those facing extended wait times. Callers can opt to be contacted later instead of waiting on hold.

Furthermore, the IRS is actively working on developing its own free tax filing program, Direct File, which is expected to launch as a limited pilot program in 13 states next year, benefiting eligible taxpayers.

As the IRS continues to strengthen its operations and services with the aid of increased funding, the debate surrounding its allocation is likely to persist. Republicans argue for cuts, while the Biden administration advocates for continued investments to ensure improved taxpayer experiences and enhanced tax enforcement efforts.