The IRS plans to increase audit rates of wealthy individuals and large corporations using funds from the Inflation Reduction Act.
The audit rate for those earning over $10 million will rise from 11% to 16.5% by 2026, while audits of corporations with over $250 million in assets will triple.
Republicans believe this will penalize the middle class, but the IRS and Biden administration officials insist the increased audits and hiring of new agents will not target those earning under $400,000 annually.
Pressed by Fox News’ Peter Doocy, WH Press Sec. Karine Jean-Pierre promises the new IRS funding in the Inflation Reduction Act will only be used to target wealthy tax cheats.
Doocy: “So no new audits on anyone making under 400,000 a year?”
Jean-Pierre: “No. Very clear. No.” pic.twitter.com/vJZn9CHIPT
— The Recount (@therecount) August 9, 2022
“As I’ve said over and over again, there is no new wave of audits coming for middle- and low-income (taxpayers), coming for mom-and-pops. That is not in our plans in any way, shape or form,” IRS Commissioner Danny Werfel said.
They aim to close the tax gap by focusing enforcement on high-income taxpayers and businesses.
The IRS expects the higher audit rates will raise around $200 billion in additional tax revenues over 10 years.
“How much of this is going to be just IRS tax collection? They want to double the size of the IRS. I understand the industry has been shrunk, gutted, in some people’s words. And do you expect increased audits on the middle class?” CNBC’s Brian Sullivan asked.
“Certainly not on the middle class. Remember, one of the lines in the sand, for all his flexibility,” White House Council of Economic Advisers member Jared Bernstein said. “President Biden has always maintained that no one under 400,000 will pay one penny more in taxes. So, line in the sand there. Look, in terms of closing the tax gap, that’s what you’re talking about here, something like 80 billion for the IRS, this raises something like 200 billion over ten years and some people call that a conservative estimate.”
