Remarks by Secretary of the Treasury Janet L. Yellen in Austin, Texas

As Prepared for Delivery

Thank you, Dixie, for the introduction. I'm glad to be introduced by someone who has benefited directly from our work to transform the Internal Revenue Service. And I'm glad to be here with Commissioner Werfel, NTEU National President Doreen Greenwald, and so many dedicated and talented IRS colleagues, and to be joined by Congressman Casar.

During the COVID-19 pandemic, the cafeteria we're in now became so full of paper that it couldn't function as a cafeteria. Now, thanks to your hard work and the Inflation Reduction Act, it's back to fully functioning. And this center has also been upgraded with new equipment, as have other high-volume centers around the country.

I'm in Austin to mark how the IRA is enabling change. I'll focus today on what we've achieved in two key areas. First, cracking down on tax evasion to advance tax fairness, where I'll announce a new milestone in our efforts to pursue wealthy taxpayers who haven't filed in years. And second, getting all taxpayers the support they deserve so that they can get more breathing room in their household budgets.

I. Biden-Harris Administration Economic Agenda and Transforming the Internal Revenue Service

But let me start by stepping back and putting this progress in broader context.

Over the past three and a half years, the Biden-Harris Administration has driven a historic economic recovery. Last week, the second estimate for Q2 GDP growth came in at 3 percent, affirming the path we are on to strong growth and declining inflation. This morning, we learned that our economy added more than 140,000 jobs in August. Our unemployment rate ticked down and remains near historically low levels. Taken together, this affirms that we have a robust economy and strong labor market even as we've brought inflation down significantly over the last two years and as we transition to stable and sustainable growth moving forward.

We recognize that costs for key household expenses, including health care, housing, and energy, are still too high. Bringing them down is our Administration's top economic priority in the short-term. We are also focused on implementing a strategy I've called modern supply-side economics that focuses on expanding our economy's capacity to produce to drive inclusive economic growth in the medium- to long-term.

Transforming the IRS is key to both these goals. In the short-term, the IRS is one of the few agencies that American families interact with each and every year. Taxpayers deserve to easily meet their obligations and get the tax credits and deductions for which they're eligible. In the medium- and long-term, our economic strategy involves implementing tax incentives to drive private sector investments in the industries of the future and to support people and places that have been left out or left behind.

But, for far too long, the IRS hasn't been equipped to give taxpayers the support they deserve nor to support our country's growth. Despite the tireless work of IRS employees, decades of underfunding have meant slow processing times, unnecessary errors, and way too large a tax gap-the amount of taxes owed but not paid.

Over the past two years, the Inflation Reduction Act, made possible by the President and Vice President's leadership and Congress' support, has finally enabled us to start changing this.

II. Cracking Down on Tax Evasion by High Earners

Let me address our work to crack down on tax evasion so that high earners pay what they owe.

For too long, this hadn't been happening. Between 2010 and 2018, the audit rate for millionaires fell by 80 percent. And during the previous Administration, as audit rates on high-income taxpayers fell, the share of audits on taxpayers with incomes under $200,000 increased. In 2019, the top one percent of Americans was estimated to owe over one-fifth of unpaid taxes, leaving ordinary Americans to shoulder the burden.

To fix this, we've channeled IRA funding toward significant investments to combat tax evasion.

I am glad to now share the first results of an initiative we launched to pursue 125,000 wealthy taxpayers who had not filed taxes for years. The IRS had not had the resources to pursue these wealthy non-filers. Now, it does, and we're making significant progress. Today, I am announcing that, in only six months, nearly 21,000 of these taxpayers have already filed, leading to $172 million recovered. This is just a first milestone, and we look forward to more progress ahead.

The IRS also continues to make substantial progress to collect tax debt from wealthy filers. I am glad to share today that nearly 80 percent of 1,600 millionaires with delinquent tax debt have now paid, leading to over $1.1 billion recovered. This is an additional $100 million since July, when we announced reaching the $1 billion milestone.

The IRS has also launched audits of 76 of the largest partnerships, from hedge funds to law firms, with average assets of $10 billion. It's working to close a major tax loophole exploited by complex partnerships; has cracked down on the abuse of corporate jets for personal travel; and is now launching audits of the 60 largest corporate taxpayers, with average assets of $24 billion.

These efforts matter. They are advancing fairness: It's not right that everyday Americans pay taxes while struggling to make ends meet, but some of the wealthiest in this country have been able to evade payment. Our successes also bolster our country's economic strength. Treasury and IRS analysis shows that our investments in technology, data, and high-end enforcement, if extended as our Administration has proposed, could generate $851 billion in additional revenue over the next decade. This is money our government needs to protect our national security, provide social security and healthcare, and invest in our nation's infrastructure, among many other priorities.

III. Supporting All Taxpayers

Let me now turn to our efforts to support all taxpayers as they engage with the IRS.

Filing taxes, claiming credits and deductions, and getting refunds should be easy. But for too long, this too hasn't worked. It's been unpredictable and frustrating.

So, we're also putting IRA funding toward significant investments in customer service. And, here too, we're seeing significant results. In filing season 2024, we reached an 88 percent level of service. This is compared to a 15 percent level of service in 2022, before the IRA was passed. In 2024, we brought phone wait times down to an average of three minutes, compared to 28 minutes before the IRA was passed. And we expanded in-person service at new or reopened Taxpayer Assistance Centers across the country.

We've also improved popular tools like "Where's My Refund?", which now provides taxpayers with clearer and more detailed updates. And we launched an entirely new product called Direct File that allows eligible taxpayers to file for free, online, directly with the IRS. The Direct File pilot this past year was a huge success, saving those who participated an estimated $5.6 million in filing fees and allowing them to claim more than $90 million in refunds. In response to demand from taxpayers, from over 200 organizations representing communities across the United States, and from over 100 members of Congress, Commissioner Werfel and I announced in June that we are making Direct File a permanent offering and invited all states to participate as soon as next filing season. Nine new states have already answered that call, and other states are preparing to join.

Today, we mark another step forward. For too long, the IRS has relied on outdated technology for its work. I am glad to now announce that the IRS has completed a critical step toward upgrading its core tax processing system. This will enable the IRS to process data quickly, transparently, and securely and to reflect tax law changes and emergency benefit programs. And this will in turn usher in a new reality for taxpayers. Taxpayers should be able to access real-time account information and take action to claim credits and get refunds just as they use the website or mobile app for their bank.

We're now well on the way to making this happen through the Digital First Initiative. Taxpayers are already able to use their online accounts to view refunds and certain audits and to access other services. The IRS has made 200 different notices and letters available online and plans to make dozens more available by the end of this year. Counting these and other innovations, the IRS has launched more digital tools in the past two years than in the previous twenty years.

These changes matter. They make it easier for taxpayers to pay their taxes and to get credits and deductions-from $7,500 to purchase an electric vehicle to up to 30 percent of the cost of residential home energy investments like solar panels and energy efficiency improvements like insulation. These credits make these investments more affordable. And they position taxpayers to be able to bring down their expenses and create more breathing room in their household budgets in the years to come.

iv. Conclusion

But even as we make progress, we continue to face challenges from those in Congress who want to cut the funding that's enabling it. This would be disastrous. It could make it easier for wealthy Americans and corporations to avoid paying what they owe while working Americans foot the bill. It could leave American households and businesses without the support they deserve. And it could contribute to increasing our country's deficit.

So, let me end by thanking all IRS employees here today and across the country who did all they could for many years with limited resources, and who are now doing all they can, thanks to the IRA, to make transforming the IRS a reality. I am committed to continuing to support you in our ongoing work. And I hope you feel very proud to see your work paying off. I know it often hasn't been easy. But you are showing the country what a group of committed public servants can do when given the tools to succeed.

Let me also thank Commissioner Werfel for his commitment to this work and for his leadership. Thank you all again for having me here, and I'll now give the floor to him.

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