The Internal Revenue Service and the Treasury Department estimate that implementing the Tax Cuts and Jobs Act will cost approximately $397 million and require hiring the equivalent of 1,734 full-time employees over the next two years.
The estimates were included in a report released Monday by the Treasury Inspector General for Tax Administration assessing the IRS’s efforts to implement the new tax reform law. The report noted the new tax law contains 119 new provisions that are administered by the IRS and affect both domestic and international taxes. Once the law was enacted, the IRS immediately began the task of implementing the new provisions.
In addition, the IRS established a multifaceted oversight structure to coordinate implementation activities among the various IRS operating divisions. This included creating an Executive Steering Committee led by the Acting IRS Commissioner, the Tax Reform Implementation Office, and the Tax Reform Implementation Council.
The Joint Committee on Taxation estimates a net reduction in tax of almost $1.5 trillion over Fiscal Years 2018 through 2027 under this law. Congress recently approved an additional $320 million for the IRS to implement the new tax law in its recent appropriations bill, but that would fall short of the new $397 million estimate.
"The Internal Revenue Service is committed to implementing the TCJA in a way that best serves American taxpayers as they seek to understand and transition to changes in the tax laws," said Sunita B. Lough of the IRS's Tax Reform Implementation Office, in response to the TIGTA report. "Like the implementation of most new and significant legislation, the implementation of the 119 provisions in the TCJA is a broad and substantial undertaking for the IRS, made even more challenging considering the posture of the agency after several years of budget cuts."
The House is scheduled to take up a package of IRS reform measures this week that the House Ways and Means Committee approved last week on a bipartisan basis (see Ways and Means Committee approves IRS reform package). Provisions include establishing an independent Office of Appeals, limiting the IRS’s ability to seize taxpayer funds, modernizing the IRS’s outdated computer systems, providing a centralized point of contact for victims of identity theft, reorganizing IRS departments to focus more on customers service, and requiring the electronic filing of the annual returns of tax-exempt organizations and making them available for public inspection.