The IRS is in big trouble. It has a historic backlog of unprocessed tax returns and the thinnest workforce the agency has had in decades.
House Republicans have been hitting the IRS with a steady wave of funding cuts since at least 2011, in response to signals that then-President Barack Obama intended to increase the agency’s funding. Since then, the cuts haven’t stopped, and Democrats aren’t happy.
On Thursday, Ron Wyden, Democratic senator from Oregon who currently chairs the Senate Finance Committee, chided Republicans for the depleted state of the IRS, suggesting that the party is to blame for millions of unprocessed tax returns this year. It is unclear if Wyden was responding to any new measure from Republican lawmakers with regards to IRS funding.
“Republicans are the guy in the hot dog suit, swearing up and down that they are trying to find the guy who did this,” Wyden said during a Senate floor speech, referencing a comedy sketch from the Netflix show “I Think You Should Leave,” that has since become an internet meme.
In the sketch, a car shaped like a hot dog crashes into a store, and a man dressed as a hot dog does his best to distract a gathering crowd and deflect responsibility for the crash, before making a run for it when policemen try to apprehend him.
The Oregon senator outlined several instances in which Republican lawmakers cutting IRS funding and obstructing proposals to increase the agency’s budget over the years, and claimed that the agency’s gutted finances has led to “budget cuts that hurt middle class taxpayers and boost wealthy tax sheets.”
The IRS did not immediately respond to Coins2Day’s request for comment.
As of last February, there were nearly 24 million unprocessed tax returns the IRS had yet to address, after starting the year with 10 million unprocessed forms. As of late April, shortly after Tax Day, the IRS reportedly still had 1.8 million unprocessed forms to go through.
IRS commissioner Charles Rettig has said that the agency plans to have the backlog cleared by the end of 2022 as it embarks on a 10,000 new worker hiring spree. In March, President Joe Biden signed off on a $12.6 billion infusion to the agency’s budget, which has been shrinking for years.
In 2021, the agency’s funding was 19% lower than in 2010, with the biggest losses reflected in the service’s enforcement and operations staff, according to a report from the Center on Budget and Policy Priorities, a policy research institute. In fact, the number of revenue agents last year had fallen by 39% compared to 2010 levels, the smallest revenue agent workforce at the agency since 1954.
Revenue agents—specialized auditors who are charged with processing the returns of wealthy individuals and corporations—are critical to the running of the IRS. But the number of these agents has been dwindling for years, and many of them are on the verge of retirement.
The staffing shortages at the IRS have led to a 79% drop in audit rates across income levels between 2010 and 2019, according to the U.S. Government Accountability Office, but America’s wealthiest people appear to have benefited from reduced audit rates the most. The sharpest declines have been for individuals earning more than $200,000 a year, due to the complexity and time usually required to complete these audits.
“The net effect of this proposal is to hobble the IRS and let the wealthiest in America get out of paying what they owe,” Wyden said.
The funding cuts, unfiled taxes, and unprocessed forms have led to big losses in tax revenue in recent years. Last October, Rettig estimated that the agency had lost nearly $1 trillion in unpaid tax revenue between 2011 and 2013 alone.
At the time, Wyden called the tax gap a “jaw-dropping figure.”