The problem with Biden’s big push at the IRS, though, is that it could mean tax refunds get delayed, like Mia Dent in Columbus, Mississippi. Her complaint is compounded by another—the IRS sent her survival check to the wrong bank account, even though she’d updated her bank information with the IRS. She didn’t receive her second stimulus check, either, because of this confusion. “I was really counting on my refund and stimulus to help pay my bills,” Dent said. She is expecting a $200 refund and qualifies for the $1,400 and the previous $600 stimulus payments. “I need any money I can get.”
That’s a complaint the IRS could be making itself right about now after decades of budget cuts that have left the agency with ancient computers systems and far too few staff to handle the load of processing annual returns and stimulus checks and making sure they have the right information for everyone. Right now the IRS is behind by about 7 million returns as of last Friday. With people rushing to get their updated 2020 income filed in time for the survival checks, that number is probably a lot larger as of this week, and will grow. Then there’s all the amended returns people who filed before last week, when the bill was signed into law. Anyone who was unemployed and already filed will need to file an amended return to benefit from the tax forgiveness they just got on the first $10,200 of their unemployment payments.
“While the IRS issues most tax refunds within 21 days of the filing season start, it’s possible some refunds may take longer,” IRS spokesman Robert Marvin said. “Many factors can affect the timing of your refund after we receive your return. Some tax returns take longer to process than others. For example, returns with an error, incomplete information or those affected by theft or fraud may take longer to process.” These are all things that have to be dealt with manually by IRS staff—staff that’s lacking.
The House Budget Committee acknowledged these problems for the IRS in a report last fall. “The Internal Revenue Service (IRS) has faced harsh budget cuts over the last decade, hindering its ability to serve the American people in fundamental ways,” the committee said. “Even before the pandemic, the underfunded IRS struggled to carry out its core functions of tax collection and enforcement.”
That means a lot of tax cheats—the big ones who could owe hundreds of thousands or even millions—are getting away with it. “According to a recent report by the Treasury Inspector General for Tax Administration (TIGTA), due to a lack of resources, the IRS failed to audit more than 897,000 wealthy individuals who skipped out on filing tax returns over a three‑year period—and these individuals owed nearly $46 billion in taxes,” the committee reported. This comes after decades of Republicans vilifying, attacking, and starving the agency.
Last June, the IRS issued a data book for fiscal year 2019 detailing its processes over the past decade. In the 2010 fiscal year, the IRS reports, it employed 13,879 revenue agents and received about 230 million returns. But in 2019, the agency received 253 million returns, an almost 10% increase, but had just 8,526 revenue agents to examine them. The returns that are increasingly being examined are the low-hanging fruit, the easy ones for overworked agents to review. That means that the superrich, who can hire accountants and lawyers, are getting away with more.
In the 2010 tax year, the IRS investigated nearly 25% of the returns from people with $10 million or more in income. By 2015, that was down to 8.16% of those returns. In 2018, the IRS was auditing just 0.03% of return from those high-income filers. Over the past decade, the audit rates for people earning more than $1 million has fallen by 81% while audits for regular working people, especially the working poor, haven’t substantially fallen. It means that the IRS is foregoing billions of dollars in revenue for the nation’s treasury.
Treasury Inspector General for Tax Administration J. Russell George, who’s held the job since 2004, admitted last year that “there’s no question that more lower‑income people are being examined than upper-income people,” because “a lot of the work that relates to poor people is the type of work that’s relatively simple for the IRS to conduct, especially with the work of junior IRS employees. The more sophisticated the income tax, the more involved it is and the longer it takes.”
That is objectively screwed up. And something that definitely needs to be fixed, along with all the other infrastructure issues—this time it’s government infrastructure. The two most consumer-facing arms of the federal government are the IRS and the Social Security Administration and both have been starved by Republican congresses for the past decade. Because Republicans have to prove that government doesn’t work by sabotaging it so it can’t work.
So if your survival check is delayed or misrouted or you get your tax refund late, don’t blame the IRS. It’s the Republicans’ (and the Democrats who bought into deficit peacock) fault.