January 30, 2023

Treasury’s Yellen says IRS needs to be ‘completely rebuilt’

Written by Andrea Shalal

LUSAKA, Zambia (Reuters) – U.S. Treasury Secretary Janet Yellen said on Sunday that rebuilding the Internal Revenue Service will be her top priority in the coming years, putting her at direct odds with Republicans who control the House of Representatives.

Yellen told Reuters in an interview en route to Zambia that she was pleased Congress had approved $80 billion in new funding to help the agency better reduce the backlog of tax returns and find $600 billion in unpaid tax bills.

She said she decided to stay on as Treasury secretary largely to oversee the implementation of legislation such as the Inflation Reduction Act, which included funding for the IRS and was passed along party lines last year.

Yellen has pushed aggressively for additional funding to help the IRS deal with what she called massive problems, including a “huge backlog” of work through tax returns, and a staff shortage to conduct complex audits of high-income taxpayers.

“I’m excited about the legislation that’s been passed and I want to make sure it makes the difference it should, and that includes the IRS,” she said. “That agency needs to be completely rebuilt, which is a big job.”

Republicans have sought unsuccessfully to cut tens of billions in IRS funding from the law.

The law also includes about $270 billion in tax credits for electric cars, home solar panels and other climate purchases that will be overseen by the Treasury Department, making Yellen a central climate figure in President Joe Biden’s administration.

“I want to see this work progress. It’s probably not the sexiest kind of thing in the world, but I think if you want to make a difference in the world, you should get the follow,” she said.

Yellen, 76, acknowledged that a divided Congress had diminished the chances of passing legislation to advance Biden’s agenda, but said she still enjoyed the position.

Her decision to stay ended months of speculation that she would step down midway through Biden’s four-year term.

“This may be the last job I will ever have,” Yellen said. I’d rather do this than sit at home knitting sweaters, or whatever one does when one retires.”

And yes, she learned to knit in college and even knitted a “nice tennis jacket” for her husband, Nobel Prize-winning economist George Akerlof.

One thing you’re not looking forward to? Asked about the debate with Congress about raising the debt ceiling, Yellen puts her hand to her forehead and sighs.

(Reporting by Andrea Shalal; Editing by Chris Reese)