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Average tax refund is little changed at $2,833, IRS chief says

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Last-minute tax tips 03:16

The IRS commissioner, who is overseeing the most sweeping overhaul of the U.S. tax code in a generation, says the $2,833 average refund in this year's tax-filing season is working out to be close to last year's.

Taxes and returns for 2018 are due on Monday.

Internal Revenue Service Commissioner Charles Rettig, who testified before Congress Wednesday, said 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. His comments come at a time when many taxpayers are skeptical about the tax overhaul signed into law at the end of 2017, with a CBS News poll finding a majority believe the changes benefited the wealthy and large corporations while their own taxes did not go down.

Americans across income groups are more likely to say their taxes are now higher than lower. Those earning less — with household incomes under $50,000 — are the most likely to say their taxes haven't been affected by the law.

Internal Revenue Service Commissioner Charles Rettig testifies on his agency's budget before a House Appropriations Subcommittee hearing on Capitol Hill
Internal Revenue Service Commissioner Charles Rettig testifies on his agency's budget before a House Appropriations Subcommittee hearing on Capitol Hill in Washington, U.S., April 9, 2019. Aaron Bernstein / REUTERS

Rettig also said that an increase is urgently needed in the agency's budget to modernize antiquated computer systems and protect taxpayers' data.

College admissions scandal

In addition, he 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 Senate Finance Committee hearing.

Rettig is a former Beverly Hills tax attorney who took the IRS helm last October after being appointed by President Donald Trump.

Funding request

The administration is asking for an increase of $170 million, or 1.5 %, in the IRS budget for the fiscal year starting in October, which would make it around $11.5 billion.

On Tuesday, the House passed bipartisan legislation aimed at making major changes in how the IRS operates. For example, the bill would provide funds for tax assistance to low-income taxpayers, establish protections for taxpayers from private debt collectors, and create an independent appeals process to help taxpayers resolve disputes with the agency.

The IRS 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 agency's 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."

Government shutdown

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% 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% of taxpayers are seeing a decrease in their tax bill this year, while about 15% 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.

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