By David Lawder

WASHINGTON U.S. Treasury Secretary Janet Yellen said on Tuesday that the Internal Revenue Service will be able to electronically accept 20 additional tax forms by early 2024, but warned its progress in modernizing systems and improving customer service would be hurt if Congress cuts the tax agency's funding.

In remarks at IRS headquarters in Washington, Yellen said the agency would commit again to answering 85% of all calls from taxpayers, with an average wait time of five minutes or less.

THE TAKE: Yellen is emphasizing improvements in customer service at the IRS as a key selling point for last year's $80 billion investment over a decade to beef up the IRS' tax collections, audits and modernize its antiquated systems. The reduced call waiting time goal marks a vast improvement from the 2022 filing season, when calls were answered 10-15% of the time, with an average hold time of 30 minutes.

Republicans in the U.S. Congress, who have long opposed the increased IRS funding, are seeking to cut IRS spending by $14.5 billion to fund aid to Israel, less than six months after a debt ceiling deal cut the planned IRS investments by about $20 billion over a decade.

The Congressional Budget Office has estimated that the reduced IRS spending from the Israel aid bill would increase the U.S. budget deficit by $27 billion over a decade because reduced audits and tax compliance would cut receipts.

KEY QUOTE: "Playing politics with IRS funding is unacceptable. Cutting it would be damaging and irresponsible," Yellen said in prepared remarks. "The IRS collects 96 percent of the federal government’s revenue. This is the funding that enables our country to protect our national security, provide social security and healthcare, and invest in our nation’s infrastructure, among other key priorities."

BY THE NUMBERS: The IRS estimates that its paperless processing initiative goals met so far means that 94% of individual taxpayers will no longer have to send mail to the IRS. For the tax filing season starting in early 2024, the IRS will allow 20 additional tax forms to be filed digitally, allowing 4 million more paperless documents, including common business forms.

The IRS says it has opened or reopened 50 taxpayer assistance centers with the new IRS funding and will increase opening times for these centers by 8,500 hours in 2024.

(Reporting by David Lawder; Editing by Chizu Nomiyama)