Treasury Sec. Directs IRS to Not Increase Audits on Middle-Income Americans

Improve the News Foundation -

Facts

  • Treasury Sec. Janet Yellen on Wed. directed the Internal Revenue Service (IRS) not to use its additional funding from the Inflation Reduction Act to increase its level of audits for Americans earning $400K a year or less.
  • In a letter to IRS Commissioner Charles Rettig, Yellen argued that the $80B over the next 10 years, including hiring 87K new IRS employees, will be used to "improve taxpayer service," and not target middle-income Americans.
  • This comes as Republicans have argued that these new agents would focus on middle-class taxpayers and small businesses after the Senate rejected an amendment specifically barring the IRS to target incomes below $400K.
  • A Government Accountability Office report stated that audit rates for those making $400K or less fell more than 60% between 2010 and 2019 due to the IRS's "reduced staff."
  • A US Treasury report estimates that the funds could be used to hire between 7K and 12K employees per year to replace retiring agents and personnel cuts over the past decade.
  • Rettig, who was nominated by former Pres. Trump, has also said that low- and middle-income earners would not be the focus of increased enforcement, adding that it will make compliant taxpayers less likely to be audited.

Sources: CNN, Daily Wire, finance, and Breitbart.

Narratives

  • Democratic narrative, as provided by MSNBC. Despite the hyperbolic allegations made by Republicans, what this bill actually does is empower the IRS to enforce tax laws already on the books. While a small number of lower income tax evaders may face more scrutiny, the far larger target will be extremely wealthy people who have not paid their fair share - in the millions and billions - for years.
  • Republican narrative, as provided by Federalist. The Democrats knew that, and probably wanted, middle- and low-income taxpayers to face more audits when they all voted against a Republican amendment to exclude such practices. On top of that, 99% of Americans earn less than $400k, so it would be silly to think the IRS wouldn't use their new agents to go after these hard-working Americans.