It’s delayed by a few days, but tax day is just about here. Since April 15th is a Saturday and Monday is a Washington, DC holiday (Emancipation Day) the country gets to wait until April 18th to file their taxes this year. Whether you finished the first draft of your return on January 1st or will be filing for that extension on Tuesday night (we have both kinds of people on staff) one thing should be true—the filing process is a little bit easier.

As Weekly Wastebasket readers recall, the IRS received $80 billion in additional funding in the Inflation Reduction Act (IRA) that is to be spent over the next decade. This funding means  the due date isn’t the only thing that seems different this year. The massive cash infusion has had an impact on service as well. For one, your call to 1-800-TAX-1040 (IRS help line cleverly using the individual income tax form 1040 as a memory clue) is  likely to be answered in a timely fashion – estimated 12 minutes or less. The hold time was 30 minutes a year ago, and that was if your call was even answered. Secondly, the backlog of tax filings has dropped dramatically. In September 2022, the Government Accountability Office (GAO) estimated the IRS has 12.4 million returns still to process (in May 2022 it was 21.3 million). As of April 1st, the IRS estimated it had 2.26 million unprocessed individual returns from this year and previous years.

This is because of how the funds are being directed. Some of those funds are set aside to update more-than-half-century old computer systems. Also, there will be tens of thousands of new hires (87,000 projected). Some of those are phone answerers. But, importantly, some are  auditors trained to tackle the estimated hundreds of billions of owed, but still unpaid, taxes (the IRS estimated the tax gap to be $496 billion for 2014-2016) by pursuing high income filers and exotic (and often abusive) tax shelters. So, in addition to improving efficiency, the Congressional Budget Office found  this funding is really an investment that will yield an additional $180 billion in revenue over ten-years’ time.

There’s another gem in the works. Did you know that tax filers with an Adjusted Gross Income (AGI) of less than $73,000 can file their taxes for free? Lacking resources to create their own system, the IRS relied on electronic tax filing giants H+R Block and Intuit (Turbotax) to provide this service to taxpayers. Of course, this would cut into their profit margin, so the companies either didn’t make it easier or tried to upsell clients. The IRA provided funds and direction that the IRS construct their own free file system, something the National Taxpayer Advocate and others have been pushing for years.

The reaction from the tax preparers and their allies has been swift. One strawman is that the IRS won’t effectively implement a free-file system because it isn’t in the government’s interest to help taxpayers pay the least amount they owe. First off, the agency can do that if it is in statute or regulation. Secondly, the vast majority of tax filers with an AGI of $73,000 or less are going to use the standard deduction ($13,850 filing single; $27,700 married filing jointly) which significantly reduces the number of additional deductions available. Finally, this argument on behalf of companies that profit from selling tax preparation software to tax filers conveniently ignores that it isn’t in these companies’ interest to have people file for free.

The bottom line is the U.S. relies on volunteer compliance for paying taxes. It’s important that all filers are paying what they owe, no more, no less. Not what savvy lawyers and unscrupulous accountants say they owe – or don’t owe. No one wants to feel like a sucker, so having an IRS that gives the public confidence that everyone is paying their tax liabilities is important. So too is having an IRS that has secure and advanced technology to quickly process claims, and an agency that can answer phones and provide guidance through a still too confusing process.

For years some lawmakers have played a cynical game. Underfund the IRS and then blame the agency for inefficiency and incompetency. Taxpayers deserve an IRS that is both efficient and works for them. The additional funding from the IRA has helped move the agency in this direction.