The IRS has said it will "absolutely not" be increasing audit scrutiny on small businesses or middle-income Americans amid concerns over Democrats' Inflation Reduction Act, which provides nearly $80 billion in IRS funding, including $45.6 billion for "enforcement."
Those issues, he said, would require "sophisticated, specialized teams in place that are able to unpack complex structures and identify noncompliance."
"These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans," Rettig added. "As we've been planning, our investment of these enforcement resources is designed around the Department of the Treasury's directive that audit rates will not rise relative to recent years for households making under $400,000."
The Inflation Reduction Act was approved in a 51–50 vote in the Senate this week, with Vice President Kamala Harris serving as a tie-breaker for Democrats.
It includes a provision allocating billions of dollars in taxpayer services, business systems modernization, and operations support as well as "enforcement" to the IRS over the next 10 years.
Those at the Top Avoiding Tax?"These appropriated funds are to remain available until September 30, 2031, and no use of the funds is intended to increase taxes on any taxpayer with taxable income below $400,000," the provision states.
Democrats have argued that the funding is needed because "hardworking American families pay their taxes on time while wealthy millionaires and billionaires avoid paying the taxes they owe to the federal government" and the IRS needs to tackle this.
"Without these new investments, those at the top will be able to get away with more and more tax avoidance. That’s not fair to the tens of millions of honest, hardworking taxpayers who play by the rules," lawmakers said.
The IRS has blamed the declining audit rates on staffing issues and the lack of experts needed to handle complex higher-income audits.
However, critics of the move have raised concerns that the IRS would use the extra "enforcement" money and tens of thousands of extra agents to target middle-class Americans instead.
'Targeting Middle-Class Americans'Sen. Ted Cruz (R-Texas), who voted against the Inflation Reduction Act this week, said the extra IRS agents will "target Americans with 1.2 million new audits, more than half of which would be for people making less than $75,000 a year."
"It’s something that should concern every American taxpayer," Emmer stated. "The IRS targeted conservatives during the Obama administration, so it’s fair to wonder whether Joe Biden will use his new IRS army to attack conservatives."
Elsewhere, Sen. Mike Crapo (R-Idaho), the ranking Republican member of the Senate Finance Committee, said the newly-bolstered IRS would go after individuals earning less than $400,000 as opposed to tax cheats and millionaires.
According to the Congressional Budget Office, the financial enhancement to the IRS is expected to bring in $203.7 billion in revenue from 2022 to 2031.