Commissioner says funds will get IRS “back to historical norms.”
QUICK FACTS:
- Internal Revenue Service (IRS) Commissioner Charles Rettig said his agency will “absolutely not” be increasing efforts toward auditing small businesses or middle-income Americans.
- Rettig’s comments came in the form of a letter to the Senate about the almost $80 billion in funding going to the IRS, $45.6 billion of which was marked for “enforcement.”
- The commissioner claimed that they need the funds to create “sophisticated, specialized teams” to go after large corporations and those with high net worths.
- Rettig claimed that the funding going toward IT upgrades would make it easier for “honest” taxpayers to comply with the law and decrease their chances of an audit.
- The commissioner assured the Senate that the increase in funding would allow the agency to reach its “historical norms” for gathering taxpayer dollars and enforcing tax laws.
THE COMMISSIONER’S LETTER IN PART:
- Commissioner Rettig said in his letter to Congress, “The resources in the reconciliation package will get us back to historical norms in areas of challenge for the agency – large corporate and global high-net-worth taxpayers – as well as new areas like pass-through entities and multinational taxpayers with international tax issues, where we need 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. 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,” Rettig went on to say.
- “Other resources will be invested in employees and IT systems that will allow us to better serve all taxpayers, including small businesses and middle-income taxpayers. Enhanced IT systems and taxpayer service will actually mean that honest taxpayers will be better able to comply with the tax laws, resulting in a lower likelihood of being audited and a reduced burden on them.”
- “Large corporate and high-net-worth taxpayers often engage teams of sophisticated representatives who pursue unsettled or sometimes questionable interpretations of tax law. Theintegrityandfairnessofourtaxadministrativesystemreliesupontheabilityof our agency to maintain a strong, visible, robust enforcement presence directed to these and other similarly situated taxpayers when they are noncompliant. These important efforts also support honest taxpayers who voluntarily comply with their filing and reporting requirements.”
BACKGROUND:
- This week, the Senate passed the Inflation Reduction Act in a 51–50 vote, with Vice President Kamala Harris breaking the tie for the Democrats.
- Over the next ten years, the IRS will receive billions of dollars in funding for taxpayer services, the modernization of business systems, operations support, and “enforcement.”
- According to a Treasury Department report from May 2021, this investment would allow the organization to hire about 87,000 people by the year 2031.
