5 things to know about Republicans’ tax oversight plans

BY: BRIAN FALER | 11/21/2022 05:00 AM EST

Don’t expect Republicans and Democrats to get together and pass many tax bills next year, but there will be a whole lot of oversight.

Winning control of the House will give Republicans the power of the purse and of oversight, and they will use both to try to embarrass the administration. Republicans love to pound on the IRS, and they have a lot of questions they believe the Biden administration has never really answered.

Here are five areas Republicans are likely to focus on when it comes to tax oversight:

THAT $80 BILLION: Of course, Democrats’ recent cash infusion for the IRS will be item one. Republicans spent much of the midterms railing against the money, and they will be under pressure to show voters they are doing something about it.

House Republican leader Kevin McCarthy has said his party’s very first bill will revoke the cash, but that’s not going to happen with Democrats in charge of the Senate. Expect a lot of messaging bills nevertheless.

And they will have a lot of questions about where exactly the money is going — something the administration has not fully explained. The Treasury Department says it will release a detailed spending plan in February.

Republicans also will focus on how the administration will make good on its promises not to use the funding to increase audits of the middle class. Hostile questions will come not just from Ways and Means, but also the Appropriations Committee, which must approve the roughly $13 billion the IRS still gets each year from Congress, in addition to that one-time $80 billion slug.

IRS TAXPAYER SERVICES: Like Democrats, Republicans are unhappy with customer service at the IRS. This will be a bipartisan area of concern that will only get more attention as the 2023 tax filing season approaches.

Republicans will be paying close attention to how many phone calls the IRS is answering, how long people have to wait to get someone on the line and how much progress the IRS is making on its backlog of unprocessed returns. National Taxpayer Advocate Erin Collins recently said there’s still six million returns awaiting action.

The administration recently announced it has hired 4,000 customer service representatives for the upcoming filing season and is promising big improvements. Treasury Secretary Janet Yellen has said the IRS will answer 85 percent of calls, and that the average wait time will fall by roughly half, to less than 15 minutes.

IMPROPER PAYMENTS: In their push for expanded IRS funding, Democrats have focused on a long list of problems: abysmal taxpayer service, long processing delays, archaic technology. One issue that hasn’t gotten as much attention: errant payments.

Expect that to change with Republicans in charge.

Improper payments have long been a nagging problem with a number of refundable tax credits, and Republicans recently signaled they will be focusing in part on Democrats’ recently lapsed monthly Child Tax Credit payment program.

In a letter earlier this month to the administration, Republicans said they want to know how many of those payments went to people who shouldn’t have received them. They also want to know more about why the White House turned to the nonprofit Code for America to create an alternative online portal to the one built by the IRS to get payments to nonfilers and what Code for America did with the data it collected from those people.

UNFINISHED BUSINESS: Republicans will revisit a lot of issues where they feel the administration has stonewalled them over the past two years.

They’ll press much harder than did Democrats on how a massive trove of wealthy people’s private tax information was leaked to ProPublica more than a year and a half ago, something the administration has never explained.

They’ll want to know more about a watchdog’s finding earlier this year that the IRS had destroyed 30 million paper tax return documents.

They still have a lot of questions about the administration’s negotiations with other OECD countries over rewriting the rules for taxing multinational corporations.

They may also use the Ways and Means Committee to pursue their investigations of Biden’s son Hunter, something that would surely inflame partisan tensions on the panel.

There’s other unfinished business, as well, that Republicans may not be so enthusiastic about.

They will face demands by Democrats to follow up on how Trump critics at the FBI — Director James Comey and his deputy — were both subject to IRS audits. The issue has gotten renewed attention in the wake of former Trump chief of staff John Kelly telling the New York Times the former president wanted to sic the IRS on many other people as well.

It’s also possible they will kill Democrats’ lawsuit seeking Trump’s tax returns. Democrats are waiting on the Supreme Court to rule on the matter. If it doesn’t decide by Jan. 3, when Republicans formally take over, Democrats expect Republicans to pull the plug on the suit.

Rep Kevin Brady, the Republicans’ point man on the committee who is retiring, says deciding how to proceed will be up to the next chair of the panel.

WERFEL: Not a House item, but Danny Werfel’s nomination to be IRS chief will give Republicans a prime opportunity to focus the spotlight on many of these issues. He needs to be approved by the Senate Finance Committee, handing Republicans plenty of chances to try to make him feel uncomfortable.

Finance Chair Ron Wyden (D-Ore.) has not said when he expects the panel to act, though he says they’re moving as soon as practicable.

Werfel, a former Obama administration budget official who’s been out of the government for almost a decade, will be able to claim ignorance of many of the goings on under the IRS’s previous management. Chuck Rettig stepped down as commissioner earlier this month.

The administration, meanwhile, is playing up Werfel’s experience in George W. Bush’s administration, hoping that will reduce some of the partisan heat around the nomination.