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The IRS commissioner faced tough questions from Senate Finance Committee

MARY LOUISE KELLY, HOST:

The nation's top tax collector faced a kind of audit of his own today. IRS Commissioner Danny Werfel was called before the Senate Finance Committee to recap the tax filing season that wraps up this week. Werfel highlighted some big improvements at the IRS. He also faced some big questions about what's ahead.

NPR's Scott Horsley joins us now. And Scott, taxpayers in most parts of the country had to already file their returns beginning of this week. What did you learn about how the IRS is handling them?

SCOTT HORSLEY, BYLINE: Mary Louise, it's a big turnaround from a couple years ago, when huge stacks of paper returns piled up, and 8 out of 10 phone calls were going unanswered. Today, the IRS is answering close to 90% of calls in an average of about three minutes. And as of early April, the tax collector had already processed more than 100,000 - excuse me - 100 million tax returns.

KELLY: A hundred million returns. That does sound like progress. Sounds great.

HORSLEY: Yeah, it is progress, and it's all thanks to the tens of billions of dollars in new funding for the IRS that congressional Democrats pushed through. Still, Commissioner Werfel acknowledged there's more work to do.

(SOUNDBITE OF ARCHIVED RECORDING)

DANNY WERFEL: There's no victory lap here. I know that a lot of taxpayers are being served well. I know that things are trending better, but the race is not finished.

HORSLEY: And in fact, Republican Senator Todd Young says he's still hearing complaints from some constituents in Indiana who say they're having trouble getting their tax questions answered.

KELLY: Hmm. Did Werfel get questions about this new online way that the IRS has been testing - people can file their taxes for free?

HORSLEY: Yeah, he really did. This is - remains controversial. So far, it's going pretty well, though. In contrast with some other online government offerings, like the original Obamacare website or the Education Department student aid form, the rollout of the IRS' Direct File system has gone pretty smoothly. And Werfel says one reason for that is the IRS deliberately started small. The Direct File was only available in a dozen states this year and only for taxpayers with relatively simple returns. About 100,000 people took the new service for a test drive during this pilot phase, and Werfel says most of them were pretty happy with it.

(SOUNDBITE OF ARCHIVED RECORDING)

WERFEL: The feedback has been great. People are telling us that it's easy to use. It's simple. Of course, they like the price tag - it's free. In the final days of the filing season, we saw an extraordinary increase in the pace of taxpayers filing with Direct File, and it all went very smoothly.

HORSLEY: Now, no decision has been made yet on whether the program will be expanded or even continued next year. It still faces stiff opposition from the commercial tax prep industry and its allies in Congress, like North Carolina Senator Thom Tillis.

(SOUNDBITE OF ARCHIVED RECORDING)

THOM TILLIS: I, for one, hope that, at some point, you just decide it's not worth it because the private-sector options are so much better it becomes a distraction.

HORSLEY: Now, one interesting note - Werfel says, because of all the news coverage surrounding Direct File, other free tax prep services offered by the private sector got a lot more traffic this year.

KELLY: Now, this hearing was also about the IRS budget for years going forward. What did we learn about that?

HORSLEY: Yeah, the Biden administration says the IRS needs even more money going forward so it can keep making improvements and also so it can keep increasing audits to be sure that wealthy companies and individuals pay the taxes they owe. Of course, Republicans on the committee take a pretty dim view of that. Wyoming Senator John Barrasso grilled Werfel about that budget request.

(SOUNDBITE OF ARCHIVED RECORDING)

JOHN BARRASSO: Are small-business owners and hardworking taxpayers really going to be protected from some of the burdensome onslaught of audits if you spend more than $100 billion on auditors and enforcement agents in the next 10 years?

WERFEL: Those are my marching orders, and I'm going to - as long as I'm commissioner...

BARRASSO: Not from anybody on my side of the aisle.

HORSLEY: So as you can hear, even with all the improvements this year, the IRS still has a pretty big political target on its back.

KELLY: Thank you, Scott.

HORSLEY: You're welcome.

KELLY: NPR's Scott Horsley. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Scott Horsley
Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.