Treasury Secretary Yellen talks IRS modernization, US economy during Austin visit

AUSTIN (KXAN) — U.S. Treasury Secretary Janet Yellen visited Austin Friday, and spoke at the city’s IRS processing center ahead of her Saturday appearance at the Texas Tribune Festival.

The Inflation Reduction Act was a key focus of her speech, touting the 2021 law’s improvements to IRS operations. Some of her examples included faster phone wait times (down to 3 minutes from 28), better levels of service (88% in 2024 from 15% prior to the IRA), and a “critical step to improving its processing system.”

“The IRS has launched more digital tools in the past two years than in the previous 20. These changes matter,” Yellen said. “They make it easier for taxpayers to pay their taxes, and to get credits and deductions…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.”

Yellen’s remarks followed her tour of the facility.

“The cafeteria used to be so full of paperwork that it couldn’t be used as a cafeteria,” said Yellen about the facility. “Thanks to the IRA it can be used again.”

She praised Congress for providing much-needed funding to the IRS, and said that attempts to reduce funding would be “disastrous” and make it “easier for wealthy Americans and corporations to avoid paying what they owe while working Americans foot the bill.”

“For far too long, the IRS has not been equipped to give taxpayers the support they deserve, nor to support our country’s growth,” Yellen said. “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 “tax gap,” defined by Yellen as the difference between taxes owed and taxes paid, is now being shortened as the agency is able to better investigate tax evasion committed by high earners.

“Between 2010 and 2018, the audit rate for millionaires fell by 80%. As audit rates on high income taxpayers fell, the share of audits on taxpayers with incomes under $200,000 increased,” she said. “In 2019, the top 1% of Americans was estimated to owe over a fifth of unpaid taxes, which left ordinary Americans to shoulder the burden.”

She revealed that the IRS’ refocused audit efforts recovered $172 million from delinquent wealthy tax payers in just six months.

Yellen also spoke on August’s jobs report and called the U.S. economy “robust, with a strong labor force.” That report shows the economy added jobs and a slight drop in the unemployment rate. It, and Yellen’s visit, both come during a month rumored to bring a reduction to the Federal Reserve’ interest rates.

“The estimate of second quarter GDP growth came in at 3%, which affirms that we’re on the path to strong growth and declining inflation,” Yellen said. “As we transition to sustainable growth moving forward, we recognize the costs for key household expenses, including health care, housing and energy, they’re still too high.”

She ended her speech with a thank you to Austin’s IRS employees.

“You did all you could for many years with limited resources, and you’re now doing all you can thanks to the IRA to [transform] the IRS,” Yellen said. “I hope you feel very proud to see your work paying off. I know it often has not been easy, but you’re showing the country what a group of committed public servants can do when you’re given the tools to succeed.”