IRS Commissioner Daniel Werfel defended the agency's budget during a congressional hearing last month, following the passage of a House Republican bill that would remove much of the additional $80 billion in funding the IRS received under the Inflation Reduction Act. Werfel emphasized the importance of the increased funding for improving taxpayer services, particularly for underserved populations and noted that the IRS has opened 16 walk-in centers this tax season.

Although some lawmakers disputed the IRS's claims of improved phone wait times, Werfel maintained that the extra funding is necessary for providing better service and modernizing the outdated system. On Wednesday, House Republicans passed the Limit, Save, Grow Act, which seeks to eliminate much of the IRS's increased funding, but the bill is not expected to advance in the Democratic-controlled Senate.

The IRS has outlined its plans for using the extra $80 billion in funding over a decade, and Werfel denied claims that the agency would target taxpayers earning less than $400,000 for increased audits. He reassured taxpayers and tax professionals that audit rates would not exceed the 2018 level, a historically low rate.

Regarding the pause in implementing the lowered threshold for filing Form 1099-K under the American Rescue Plan Act of 2021, Werfel admitted the provision was more complicated than anticipated and welcomed any measures to simplify the administration process.

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