More than two-thirds of registered voters support boosting the IRS budget to strengthen tax enforcement on high-income taxpayers, according to a 2021 poll from the University of Maryland.The Senate bill is significantly smaller in size-and includes far fewer revenue-raising provisions-than the reconciliation bill the House passed in November 2021 under the “Build Back Better” moniker (the “House BBBA”).
"These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans," he added. "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," he wrote in a letter to the Senate. IRS Commissioner Charles Rettig said the $80 billion in funding would not increase audits of households making less than $400,000 per year. Mike Crapo, R-Idaho, ranking member of the Senate Finance Committee said in a statement. "My colleagues claim this massive funding boost will allow the IRS to go after millionaires, billionaires and so-called rich 'tax cheats,' but the reality is a significant portion raised from their IRS funding bloat would come from taxpayers with income below $400,000," Sen. While advocates applaud the enhanced IRS budget, opponents argue the beefed-up enforcement may affect more than wealthy Americans, violating Biden's $400,000 pledge. The Congressional Budget Office only estimates about $3 billion of the $203.7 billion in revenue for 2023. However, if the Inflation Reduction Act is approved by the House and signed into law, it will take time to phase in the added IRS funding, explained Garrett Watson, a senior policy analyst at the Tax Foundation. The agency said it is working to improve these numbers. The audit rate for Americans making $5 million or more dropped to about 2% in 2019, compared to 16% in 2010, the report found. IRS audits have plunged over the past decade, with the biggest declines among the wealthy, according to a May 2022 report from the Government Accountability Office. More from Personal Finance: Does the Inflation Reduction Act violate Biden's $400,000 tax pledge? 5 things borrowers can do while they wait for student loan forgiveness Is the economy in a recession? Top economists weigh in Collectively, those improvements are projected to bring in $203.7 billion in revenue from 2022 to 2031, according to recent estimates from the Congressional Budget Office.
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The remainder of the funding is earmarked for operations, taxpayer services, technology, development of a direct free e-file system and more.
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