Modernization is on track.

Biden administration officials say the cuts to the increased budget would not affect the IRS’s investment strategy or improvements in the near term. But the repeated debates over its funding threaten to upend the long-term and expensive task of modernizing the federal tax collection service — and Biden’s bid to use tax fairness as a populist economic plank in his reelection campaign.

“The way to think about it is the fairness argument,” Deputy Treasury Secretary Wally Adeyemo told The Washington Post. “That gets down to the fact that we know millionaires and billionaires don’t pay their taxes like you and I do. There’s no American who likes to be treated unfairly and know the wealthy live by a different system.”

Werfel told The Post that the budget cuts would not affect the agency’s operations in the run-up to this tax season, nor its modernization over the next few years.

The original $80 billion in funds from the Inflation Reduction Act was supposed to last 10 years, and IRS leadership planned to load most of the money into the last few years, agency leaders said, to complete the most costly technological modernizations and sustain hiring drives. Now, the agency plans to shift that spending up by two years, Werfel said.

The commissioner, though, did issue a warning to lawmakers about the long-term effects of cutbacks.

“Any proposed IRA funding rescission to IRS technology modernization efforts would delay the delivery of several planned improvements and require further use of modernization funds to pay for ongoing IT operations rather than enhancements,” Werfel wrote in December to Sen. Ron Wyden (D-Ore.), chair of the Senate Finance Committee, according to a copy of the letter obtained by The Post. “This includes the potential for stopping or ending support for improvements the IRS has recently delivered.”

Republicans, though, said cutting back the IRS money was essential.

“That’s low-hanging fruit, in my view, to go after the IRS expansion,” Rep. Bob Good (R-Va.), chair of the archconservative House Freedom Caucus, said in an interview. “The American people don’t support that.”

Democrats’ $80 billion wager: A bigger IRS will be a better IRS

The IRS was in desperate need of modernization. For years, it has used computer coding language that dates to the 1950s; it has dozens of separate case-management systems, tying customer service representatives in knots as they attempt to help befuddled taxpayers. In 2022, the agency answered a mere 13 percent of its taxpayer-assistance phone calls.

It is routinely outgunned on potentially lucrative collection cases involving wealthy individuals, business partnerships and corporations with access to high-octane accountants and tax attorneys.

But the 2023 filing season marked a stunning turnaround, according to tax practitioners. The IRS staffed up its call centers and answered 85 percent of taxpayer calls, according to the Taxpayer Advocate Service, an independent watchdog within the agency. It eliminated its backlog of paper returns, which had reached 24 million in 2022.

The IRS braces for the unthinkable: A normal tax season

The IRS invested in scanners that can digitize documents for quicker processing — and faster issuing of refunds. It is set to pilot a free government-backed tax-filing system and begin hiring high-value collections experts.

“There were improvements in response time and rate of response. That’s obviously successful. At the same time, they’ve spent a lot of the services money up front, and a lot of those improvements are in services hiring, adding people to answer the phones. And if that money runs out, you haven’t built a system that’s self-perpetuating, or could keep going if you don’t have the same number of people to answer the phones,” said Alex Muresianu, senior policy analyst at the right-leaning Tax Foundation think tank. “On the whole, I think it’s been fairly successful, based on the services side. And on other aspects like technology and enforcement, we still have to wait and see.”

White House officials say they hope the service improvements — with more to come — will help convince voters and lawmakers to support additional IRS funding in the near future.

In the meantime, Werfel said, his agency will be “full systems go” to spend money on technological investments and more staffers.