Written by MARCY GORDON AP Business Writer
(AP) — The head of the IRS, overseeing the most sweeping overhaul of the U.S. tax code in three decades, says the average refund in this year’s tax-filing season, $2,833, worked out to be close to last year’s.
Taxes and returns for 2018 are due on Monday.
Internal Revenue Service Commissioner Charles Rettig told Congress Wednesday that an increase is urgently needed in the agency’s budget to modernize antiquated computer systems and protect taxpayers’ data.
Rettig also confirmed that several more people are expected to be charged with violating tax laws in connection with the sweeping college admissions cheating scandal.
The IRS is working with the FBI on the investigation of the cheating scheme, which has led to charges against 33 wealthy parents including Hollywood stars Lori Loughlin and Felicity Huffman.
Some of the parents accused of cheating to get their children into prominent schools also allegedly wrote off the bribes on their taxes. Those parents’ bribes were said to be disguised as “donations” to the Key Worldwide Foundation. Consultant Rick Singer, who ran the tax-exempt foundation, has pleaded guilty to charges including racketeering conspiracy.
“We expect numerous other individuals to be charged with criminal tax violations,” Rettig said at a hearing by the Senate Finance Committee.
Rettig is a former Beverly Hills tax attorney appointed by President Donald Trump who took the IRS helm last October.
He testified that some 65 million refunds totaling about $191 billion have been issued as of March 22. The average amount of $2,833 is close to last year’s $2,864.
The administration is asking for an increase of $170 million, or 1.5 percent, in the IRS budget for the fiscal year starting in October, which would make it around $11.5 billion.
The agency has been pummeled for years by criticism from congressional Republicans and funding cuts, and last year had to take on the responsibility of administering and enforcing the most extensive restructuring of tax laws in 30 years.
Rettig said a top priority is modernizing the IRS’ technology systems, which date to the Kennedy administration. The agency’s six-year plan “will position the IRS to greatly improve and expand the services we provide to taxpayers … and will also help us in our ongoing efforts to secure our systems and protect taxpayer data.”
The results for this year’s tax-filing season, the first since the $1.5 trillion Republican tax-cut legislation took effect, followed a rocky period during the 35-day partial government shutdown that ended Jan. 25. As the closure dragged on, concern mounted that people who were due to receive money back would have their refunds postponed. About three-quarters of taxpayers receive annual refunds, giving them an incentive to file their returns early.
Many lower-income people count on refunds as their biggest cash infusion of the year. In mid-January, the IRS recalled about 46,000 of its employees furloughed by the shutdown — nearly 60 percent of its workforce — to handle tax returns and pay out refunds. The employees weren’t paid during the shutdown.
The Treasury Department has estimated that around 80 percent of taxpayers are seeing a decrease in their tax bill this year, while about 15 percent owe roughly the same amount. Fewer people are expected to receive a refund this year. Government officials say that doesn’t reflect rising or falling tax liability.
The tax law muscled through Congress by Republicans in late 2017 stands as Trump’s signature legislative achievement. It took effect Jan. 1, 2018. The package provides generous tax cuts for corporations and the wealthiest Americans, and more modest reductions for middle- and low-income individuals and families.