Internal Revenue Service Commissioner Daniel Werfel responded to a range of concerns from lawmakers Thursday from the controversial $600 reporting rule to leaks at the agency.
The questions came during the House Ways and Means Committee hearing, where a key topic was a controversial IRS rule that would subject Americans who send more than $600 on apps like Venmo to IRS scrutiny.
“Last time you were before this Committee, the IRS had chosen to delay a provision of a law crafted by the Biden Administration and Congressional Democrats that would send tax forms to 44 million Americans just for engaging in transactions over $600 in a year,” House Ways and Means Chair Rep. Jason Smith, R-Mo, said in his opening remarks. “This includes transactions like simply selling a used couch or concert ticket through a third-party payment platform. Once again, the IRS unilaterally chose to delay implementing the law or sending these forms — this time in an election year.”
In his testimony, Werfel said the $600 rule was because of a 2021 law passed by Congress.
“Reporting requirements do not apply to personal transactions such as giving birthday or holiday gifts, sharing the cost of a car ride or meal, or paying a family member or another for a household bill,” Werfel said in his testimony. “The IRS delayed the effective date for the new threshold in November 2023, for a second time, in response to continuing concerns from taxpayers, tax professionals, and payments processors.
“IRS plans for a threshold of $5,000 as part of a phased-in implementation of the $600 reporting requirement,” he added.
Another issue at the hearing was an IRS contractor who leaked confidential taxpayer records to the media and was sentenced to five years in prison.
“I think the Department of Justice woefully undercharged this individual, but I’m pleased the Judge applied the maximum sentence available to her,” Smith said. “But this story doesn’t end with that case. The IRS must be accountable for allowing this theft to happen and must ensure that it fixes security vulnerabilities at the agency. A recent report from the Inspector General described alarming details about current IRS security flaws that demonstrate the problem has not been resolved.
“I hope that you will commit today to address their findings quickly, for the sake of millions of taxpayers.”
The hearing comes the same week that the House Oversight Committee opened an investigation into the IRS for alleged selective enforcement of its tax-exempt rules.
The committee’s chair, Rep. James Comer, R-Ky., sent a letter to Werfel this week raising concerns that the IRS was not enforcing its tax-exempt rules against liberal nonprofits that were illegally politically lobbying when it has a history of being tough on conservative groups for the same offense.
As The Center Square previously reported, former IRS head Lois Lerner was the center of her own scandal during the Obama administration for using the IRS to target the Tea Party and similar conservative groups A House Oversight Committee review the IRS’ conduct and found the agency “systematically scrutinized and delayed conservative groups applying for tax-exempt status.”
Comer’s letter gives the example of one group called, One Fair Wage, which advocates to raise the minimum wage.
“According to a statement of work on their website, the organization is “currently leading the 25 by 250 Campaign, through which One Fair Wage is moving legislation and ballot measures in 25 states…,” the letter said. “In civil litigation initiated by One Fair Wage, Inc., last year, the entity represented on multiple occasions that a significant activity of the organization, if not its primary purpose, includes lobbying.”
Comer’s inquiry is just the latest development in the ongoing questions and concerns from lawmakers for the agency, which just received about $80 billion from legislation passed earlier in President Joe Biden’s term.
Biden pushed for the cash infusion for the tax-collecting agency to ramp up auditing of Americans. He argued the increased audits would more than pay for the $80 billion.
Many Republicans have been pushing to repeal that funding, point to the IRS’ range of issues.
