After more than a year of fighting among themselves, Senate Democrats finally passed their beloved reconciliation package on August 8, and the House is expected to quickly follow suit. The so-called Inflation Reduction Act (HR5376) provides roughly $79.8 billion in funds for the IRS. This includes $45.6 billion for “tax enforcement activities” and $153 million for the US Tax Courts’ “necessary expenses.” However, the agency reportedly won’t be using the windfall to fund additional audits on working-class Americans.
Anticipating the bill’s passage, IRS Commissioner Charles P. Rettig sent a letter to senators on August 4, praising the allocation of resources in the measure. He explained the funding will allow the service to return to “historical norms” in several areas of concern — namely “large corporate and global high-net-worth taxpayers.” In other words, he claimed the IRS would target one-percenters.
He also said the new financial resources wouldn’t be used to “increase audit scrutiny” on “small businesses or middle-income Americans.” According to him, the IRS’ audit rates on households taking home under $400,000 per year would not see an increase in examinations. Instead, the service would invest in enhanced IT systems and taxpayer services to better serve taxpayers.
What do you think? Do you believe the IRS won’t target middle-class Americans and small companies for increased audits using these newly allocated funds? If so, why did Democrats strike down a proposed amendment guaranteeing that in the bill?