The Inflation Reduction Act granted the Internal Revenue Services another $80 billion in funding, which will be used to hire 87,000 new agents. IRS Commissioner Charles Rettig wrote a letter to the U.S. Senate last week assuring them that the additional resources would be used to crack down on “large corporate and high-net-worth taxpayers” that are not paying their “fair share.”
Rettig expressed gratitude that the funds will bring the department back to “historical norms in areas of challenge for the agency.”
The Biden administration and the Democratic Party have repeatedly promised Americans that any household with an annual income under $400,000 will not see an increase in its taxes.
Rettig reiterated those guarantees, “These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans. As we’ve been planning, our investment of these enforcement resources is designed around the Department of the Treasury’s directive that audit rates will not rise relative to recent years for households making under $400,000.”
The Government Accountability Office reported that audit rates have dropped over the past decade. The IRS insisted that the decrease is due to a lack of resources.
Over half of the $80 billion will be specifically dedicated to “enforcement.”
“The IRS has for too long been unable to pursue meaningful, impactful examinations of large corporate and high-networth taxpayers to ensure they are paying their fair share,” Rettig wrote.
The Congressional Budget Office estimated that the IRS would bring in $203.7 billion in revenue over the next decade.
Idaho Senator Mike Crapo (R) released a statement on Sunday speaking out against his colleagues. He explained that the funding boost would not be used only to target millionaires and billionaires but would also impact taxpayers making below $400,000.
“Otherwise, why would the legislative text say the funding isn’t intended to target taxpayers below that threshold? My colleagues and Americans know the real answer: small business owners, cash-heavy businesses and those who can’t afford legal teams are easy targets for the new IRS agents and their audits,” Sen. Crapo stated.
Texas Senator Ted Cruz (R) shared a similar sentiment. He said, “They’re not being created to audit billionaires or giant corporations. They’re being created to audit you. The House Ways and Means Committee, the minority, has put out an estimate that under this bill, there will be 1.2 million new audits per year, with over 700,000 of those new audits falling on taxpayers making $75,000 or less.”