A few weeks ago, we looked at warnings from the National Taxpayer Advocate that the IRS is entering tax season with fewer staff, stalled modernization projects, and shrinking resources. At the same time Congress continues to add new responsibilities to the agency. Against that backdrop, lawmakers are also debating how a functioning tax administration should actually work. A newly introduced bipartisan bill offers a window into their thinking—and highlights the growing gap between the IRS Congress says it wants and the one it is currently funding.
The Senate Finance Committee has jurisdiction over the IRS, and its Chairman Mike Crapo (R-ID) and Ranking Member Ron Wyden (D-OR) just introduced the Taxpayer Assistance and Service Act, a wide-ranging bill aimed at improving customer service and fixing longstanding administrative headaches in the tax system. Among other things, the legislation would require the IRS to digitize paper returns and correspondence, expand online taxpayer accounts, provide real-time information about call wait times and processing backlogs, streamline tax dispute procedures in the U.S. Tax Court, and strengthen oversight of tax return preparers.
The bill would move core processing further away from paper by requiring electronic acceptance of returns and digitization of physical submissions. It would create a public dashboard showing IRS service performance and upgrade refund and account tools so taxpayers can see whether returns have been received, whether processing is suspended, what information the IRS needs, and where refunds are going. It also includes targeted taxpayer protections, such as waiving certain installment agreement fees for low-income filers, automatically protecting some Earned Income Tax Credit refunds for taxpayers in financial hardship, strengthening the independence of the National Taxpayer Advocate, and expanding Tax Court jurisdiction so more disputes can be resolved in that venue.
What stands out isn’t just the list of fixes—it’s the implicit acknowledgment behind them. Nearly every provision assumes a tax agency capable of modernizing its technology, maintaining digital services, processing information quickly, and responding to taxpayers in real time. In other words, the bill sketches the blueprint of a functioning 21st-century tax administration at the very moment Congress is stripping away the resources needed to build it.
The Finance Committee leadership agree on the problems and even many of the solutions. Now it is up to lawmakers to approve it and just as importantly fund the infrastructure required to make those solutions real.
