The law includes around $79 billion for the IRS over ten years. According to the impartial Congressional Budget Office, the increased IRS enforcement provided by the law will result in an increase of $204 billion in revenue over ten years. That amounts to additional taxes that are due by the law but are not paid.
According to Treasury Department representatives, not all new workers will be involved in enforcement, and middle-class people won’t contribute more to the economy. IRS Commissioner Charles P. Rettig was instructed not to use the increased funding to step up enforcement of taxpayers making less than $400,000. Treasury Secretary Janet L. Yellen gave this directive. One of the Treasury Department’s divisions is the IRS.
“Specifically, I direct that any additional resources — including any new personnel or auditors that are hired — shall not be used to increase the share of small businesses or households below the $400,000 threshold that are audited relative to historical levels,” Yellen said in a letter to Rettig dated Aug. 10.
Accordingly, small businesses or people making $400,000 a year or less won’t experience an increase in the likelihood that they will be audited, despite what the law’s opponents have falsely claimed.
However, social media users and Republican members of Congress have disseminated the myth that “87,000 new IRS agents” will be hired as a result of the new law.
The statement made by Sen. Ted Cruz that “87,000 new IRS agents” will target small businesses and common Americans in a Fox News interview that was uploaded to Facebook was false on both counts.
Furthermore, Cruz added, “These IRS agents aren’t on the job to go after billionaires. They are there to find you. To target your small business is their goal.
However, not every new hire will be an “agent,” as we will explain later. There is a significant distinction between IRS employees who make up the majority of the IRS staff and IRS agents, such as revenue agents and special agents.
And, as we previously stated, the Treasury Department has instructed the IRS to stop concentrating on small firms and those making more than $400,000 per year.
According to some versions of the claim, the 87,000 new “agents” will be armed, but as we’ve previously noted, the only “special agents” who are allowed to carry firearms are those who look into criminal infractions of the tax code.
Rep. Matt Gaetz went a step further and described it as “bizarre” that the IRS spent $700,000 on ammunition between March and June 1. The purchases, he claimed, are a part of a “broader attempt” to remove ammunition from the market. The purchases this year, however, are comparable to those from prior years, as we will discuss in more detail later.
Some of the allegations made about the IRS on social media were connected to an unrelated incident — the FBI search of former President Donald Trump’s Florida estate Mar-a-Lago.
“The IRS is after you. The DOJ is after you. The FBI is pursuing you. In Joe Biden’s America, nobody is immune from political retribution, according to a post from the Republicans’ official Twitter account for the House Judiciary Committee.
The Inflation Reduction Act’s cash, however, was used to acquire resources, as IRS Commissioner Rettig stated in a letter to Congress on August 4: “It is absolutely not about increasing audit scrutiny on small businesses or middle-income Americans.”
According to Rettig, “other resources will be spent in personnel and IT systems that will enable us to better serve all taxpayers, including small businesses and middle-income taxpayers.”
money for customer support and enforcement
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An equivalent $80 billion investment, as suggested in Biden’s American Families Plan, was expected to have enabled the IRS to modernize and restore the “IRS enforcement capability” in several ways, including by recruiting 86,852 full-time personnel. The notion that “87,000 new agents” were hired apparently stems from there.
According to the 2021 report, there would be two parts to the $80 billion investment to rebuild the IRS: “a dedicated stream of obligatory money ($72.5 billion over a decade) and a program integrity allocation ($6.7 billion over a decade).”
The 2021 report stated that the $6.7 billion program integrity budget will be used for “the hire and retention of at least 5,000 new enforcement professionals.” Over 10 years, the obligatory monies are distributed.
They offer resources for enforcement, including a major investment in reviving the IRS’s scrutiny of large firms, partnerships, and globally high-wealth and high-income people.