GOP says IRS will hire 87,000 agents to target middle class
It has become one of the Republicans’ main lines of attack against their Democratic opponents.
In campaign materials and TV ads, Republican candidates claim the Internal Revenue Service is hiring 87,000 enforcement officers to target middle-income people.
Republican candidate Brandon Williams, who is running in the 22nd congressional district, claimed in a television ad that his opponent, Democrat Francis Conole, supports President Joe Biden’s plan to “hire 87,000 tax officials to target the middle class”.
In the neighboring 24th Congressional District, Republican U.S. Representative Claudia Tenney has introduced legislation that would redirect IRS funds to Border Patrol so it can hire more agents. Tenney said in a statement that Biden and the Democratic Party are “ignoring the problem (on the southern border) and instead giving tens of billions of dollars to the IRS, not to improve its services but so they can audit 700,000 additional workers. Americans.”
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The Cut Inflation Act passed by the Democratic-led Congress and signed by Biden includes nearly $80 billion for the IRS over 10 years.
According to the text of the bill, most of the funds — more than $45.6 billion — will boost the agency’s law enforcement activities. The remaining funding will be used for other purposes, including $25.3 billion for operations support, $4.7 billion to modernize business systems and $3.1 billion to provide taxpayer services. .
The Congressional Budget Office has analyzed the IRS funding included in the Inflation Reduction Act and estimates that increased enforcement will generate $180 billion in additional revenue over the next decade.
Due to concerns that increased IRS enforcement could lead to more audits of low- and middle-income taxpayers, Treasury Secretary Janet Yellen issued a directive to the IRS stating that “any additional resources – including including any new staff or auditors that are hired – should not be used to increase the share of small businesses or households below the $400,000 threshold that are audited from historical levels.
Yellen continued, “This means that, contrary to misinformation from opponents of this legislation, small businesses or households earning $400,000 a year or less will not see an increased chance of being audited.”
The CBO answered a question from Republicans about how new IRS funding will affect taxpayers earning less than $400,000. It provided that “an increase in revenue collected from taxpayers with income less than $400,000 (as reported before and after any enforcement activity) will constitute a small fraction of the total increase collected from all taxpayers resulting from increased IRS funding.”
The bureau added that the fraction “will be small because, according to the CBO, the IRS will follow (Yellen’s direction) and enforcement resources will focus on what the secretary calls high-end noncompliance.”
In its letter to GOP members of Congress, the CBO acknowledges that “audit rates at historic amounts, in accordance with (Yellen’s directive), will stimulate audit activity…”
When Republicans say the IRS will use the funding to hire 87,000 agents, they’re right about one thing: the number of employees.
A report released by the Treasury Department in 2021 shows how IRS staff numbers would grow with significant investment. There would be nearly 87,000 employees by FY2031.
Bill Smith, who is the national director of tax technical services at CBIZ MHM’s national tax office, told CNBC that the number of IRS employees has declined by 17% since 2010. The worker shortage has contributed to the taxpayer service issues – there were about 8 million unprocessed returns and the agency responded to 11% of its calls last year, he said.
While the funding would be used to strengthen law enforcement, it would also be used to fill other positions.
The Treasury Department report makes an important revelation – that the IRS “has fewer auditors than at any time since World War II”.
This affects all filers – there was a 45.39% decrease in audit rates from 2010 to 2018 – but especially high earners and large businesses. According to the Treasury Department, audit rates for those earning more than $1 million decreased by 61.35% and 63.76% for those earning more than $10 million.
For companies with $20 billion in assets, audit rates have dropped by almost 50%.
The main reason for the drop in audit rates: there were fewer employees. The agency’s overall budget has shrunk 18.5% and its enforcement budget has shrunk 15% between fiscal years 2010 and 2021, the Treasury Department said. During this period, the IRS workforce decreased by 20%.
Republicans are misleading voters about how IRS funding will be used and who will be targeted for enforcement.
The IRS will not hire 87,000 agents. Although more auditors will be added, there are other vacancies at the agency, including employees who provide services to taxpayers.
The Treasury Department has ordered the IRS to ensure that people earning less than $400,000 “are audited against historical levels.” In its assessment, the Congressional Budget Office said revenue collected from taxpayers earning less than $400,000 “will be a small fraction of the total increase collected from all taxpayers as a result of increased IRS funding. “.
While it is true that IRS audit activity will increase, it will primarily target high income earners and large corporations. Audit rates for these groups have been much lower over the past decade.
Political journalist Robert Harding can be reached at (315) 282-2220 or [email protected] Follow him on Twitter @robertharding.