A new report from the IRS watchdog finds that the tax collecting agency is already struggling to implement the massive infusion of $80 billion in new funding Democrats provided in the so-called Inflation Reduction Act. The agency is slated to release a spending plan next month, but the problems for the agency are already mounting:
- Disproportionately More Funding for Audits of Families and Small Businesses than Customer Service: Only $3 billion of Democrats’ $80 billion in new funding for the agency is going towards customer service, while the rest of it is intended to support efforts to wring dollars from families and small businesses. As the report states, contrary to Secretary Yellen’s nonbinding promises, “IRS officials have not yet finalized what constituted the $400,000 income level or what historic audit level will be used for its metrics. They indicated that this is still being discussed between the IRS and the Treasury Department.”
- Only Thing Standing Between More Audits on More Families is IRS Hiring Challenges, Not Biden Administration Promises: IRS personnel are not currently concerned about increased audits on the middle class, but not because of Secretary Yellen’s promises. According to the report, it’s a hiring problem: “IRS officials do not believe there is an immediate risk of violating the Secretary’s commitment because employee attrition and hiring challenges will limit its ability to conduct more audits.” In other words, when they have the numbers, they’ll perform the audits.
- Six Months and a “Special Committee” to Complete a Plan for the Money: The report notes that the IRS has formed a committee – and established an entire office – to coordinate the implementation of the extra funding, with a plan due in February. A better use of agency time than answering customer service calls?
Chairman Jason Smith (MO-08) said:
“At a time when Americans are facing the double threat of sky-high inflation and an economy in recession, top bureaucrats at the IRS are huddling over how to spend their $80 billion windfall, and what technicalities they can use to justify auditing families and small businesses.
“Congress’s nonpartisan scorekeeper has confirmed that at least $20 billion will come from increased audits on Americans making less than $400,000 per year. Projections based on historical IRS audit data show that under this expansion, the IRS will conduct an additional 700,000 audits on Americans making less than $75,000 a year.
“President Biden and Secretary Yellen need to come clean with the American public about the true extent of their enforcement plans and exactly how many middle-class families will be swept up in their audit scheme. The American people are already dealing with 40-year high inflation; the last thing they need is a visit from the IRS.”
-Chairman Jason Smith (MO-08)