Reconciliation bill includes nearly $80 billion in IRS funding

Charles P. Rettig, commissioner of the Internal Revenue Service, testifies during a Senate Finance Committee hearing titled IRS Fiscal Year 2022, at the Dirksen Senate Office Building in Washington, DC, on June 8, 2021.

Tom Williams | Swimming Pool | Reuters

Senate Democrats on Sunday passed climate, health and tax packagesincluding nearly $80 billion in IRS funding.

Part of the President Joe BidenThe Inflation Reduction Act Agenda allocates $79.6 billion to the agency over the next 10 years. More than half of the money goes to enforcement, with the IRS aiming to collect more from companies and high net worth tax evaders.

The remainder of the grant is devoted to operations, taxpayer services, technology, development direct free electronic file system and more. In general, those improvements are is expected to bring in $203.7 billion in revenue between 2022 and 2031, according to recent estimates from the Congressional Budget Office.

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IRS audits have declined over the past decade, with the largest drop among the wealthyfollow a Report May 2022 from the Government Accountability Office.

The report found that the audit rate for Americans earning $5 million or more fell to about 2% in 2019, compared with 16% in 2010. The agency said it was work to improve these numbers.

However, if the Inflation Reduction Act is passed by the House and signed into law, it will take time to allocate additional IRS funding, explained Garrett Watson, senior policy analyst at the Tax Foundation. The Congressional Budget Office estimates only about $3 billion of the $203.7 billion in revenue for 2023.

“We don’t get to this state with the agency overnight and it will take longer than overnight to get on track,” he said.

IRS: We won’t step up ‘audit oversight’ on the middle class

While advocates welcome increased IRS budgets, opponents argue that increased enforcement could affect more wealthy, infringing Americans. Biden’s $400,000 Pledge.

“My colleagues claim that this massive funding boost will allow the IRS to go after millionaires, billionaires, and the so-called rich ‘tax fraud’, but in reality a significant portion the proceeds of their IRS endowment will come from taxpayers earning less than $400,000,” said Senator Mike Crapo, R-Idaho, senior member of the Senate Finance Committee said in a statement.

IRS Commissioner Charles Rettig said the $80 billion grant would not increase audits for households earning less than $400,000 a year.

“The resources in the mediation package will bring us back to historic benchmarks in areas of challenge to the agency – large corporations and high net worth taxpayers globally,” he said. write in one Letter to the Senate.

These resources are not at all about increasing audit oversight of small businesses or middle-income Americans, he added.

According to one Poll 2021 from the University of Maryland.

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