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IRS and ATO aim to expand and modernise, say senior officials

Clockwise from top left: Jennifer Best, Sharon Katz-Pearlman, Rebecca Saint, Angela Wood

In a recent webinar hosted by law firms Greenberg Traurig and Clayton Utz, officials at the IRS and ATO outlined their visions for 2023.

The US Internal Revenue Service and the Australian Taxation Office plan to further invest funds into their workforces to provide better customer support, modernise digital services and strengthen their compliance teams.

In a webinar hosted on March 7, the tax offices joined together to share updates from their jurisdictions and their plans for 2023.

The IRS received $80 billion for transformation funding in 2022. Approximately $3 billion was for services, $46 billion for enforcement, $25 billion went into operation support, and business systems modernisation received $5 billion.

The Inflation Reduction Act, which became law in August last year, originally included a requirement for the IRS to pull together a spending plan for Congress, but the requirement was removed during the legislative process.

Jennifer Best, who is acting deputy commissioner for large business and international for the IRS, said: “The main effort is to identify a long-term vision, but we’re mindful that there are obvious and immediate challenges that must be addressed.

“The first is customer service. This year, we’re looking to fully staff our taxpayer assistance centres.”

IRS goals include: all filings and processes will be available electronically, most issues will be resolved online, taxpayers will be able to access their own accounts for the information they need without having to go through an IRS assistor, and wait times for phone call assistance will be reduced.

The IRS will also be broadening its efforts regarding compliance. The agency says it has not been able to deliver because of resource challenges, including more pre-file work, legal guidance, post-file resolution, and the hiring and training of staff.

“We are working on modernising our core IT infrastructure, including better meeting the needs of our employees. Human capital and retention of talent are key,” Best added.

Australian updates

Also on the webinar was Rebecca Saint, who is deputy commissioner for public groups and international for the ATO.

In 2016 the ATO set up a tax avoidance task force with A$678 million ($453.3 million) to extend over a four-year period. Because of the task force’s success, the funding was extended to A$1 billion.

In May 2022, Australia welcomed a new government under Prime Minister Anthony Albanese. The ATO then received a further A$200 million, bringing the total to A$1.2 billion.

This funding ultimately means the ATO can now resource a further 1,200 employees for the task force.

On the webinar, Saint said: “We are being very public about our ambitions on where we want to get to with those measures.”

The ATO has significantly invested in public advice and guidance programmes and has set up justified trust programmes to ensure that taxpayers are paying the correct amount.

Seven years on from the initial task force investment, the ATO says it has already seen a decline in tax avoidance and profit shifting as it locks in the necessary behavioural changes.

The webinar was co-hosted by US law firm Greenberg Traurig and Australian outfit Clayton Utz. Sharon Katz-Pearlman, a shareholder at Greenberg Traurig, and Angela Wood, partner at Clayton Utz, also joined the event.

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