The political right has issued new predictions about a “shadow army” or militia of armed auditors who will extort your neighbour, your neighbour’s parents, and their mom-and-pop enterprises as a result of the $80 billion Inflation Reduction Act awarded to the Internal Revenue Service.
Republicans and the IRS have a long-standing feud, and the increased budget for the agency provides them something to campaign on in this fall’s midterm elections when it will be up for grabs who controls the House and Senate.
The Biden administration’s efforts to reform the IRS will undoubtedly be hampered by the widespread conspiracy theories that have appeared on social media and on conservative news outlets.
Certain rumours are going around that are accurate. Some are, but not all. Knowing the following will help:
‘Coming For You: Is the IRS?
House Minority Leader Kevin McCarthy (R-CA) issued a warning to taxpayers who make $75,000 in a tweet, saying that “Democrats’ new army of 87,000 IRS officers will be coming for you – with 710,000 more audits.”
According to a New York Times story, IRS Commissioner Charles P. Rettig wrote to Congress that audits won’t be proportionately increased for people earning $400,000 or less annually.
Rettig remarked, “These resources are positively not about tightening audit scrutiny on middle-class Americans or small enterprises.”
“As we have been preparing, our investment in these enforcement tools is designed around Treasury’s order that audit rates for households making under $400,000 will not increase relative to recent years,”
Instead, affluent tax fraudsters will be the target.
Rettig said before Congress earlier this month: “Large corporations and high-net-worth taxpayers frequently retain teams of knowledgeable representatives to pursue disputed or perhaps dubious interpretations of tax law.”
“Our agency must be able to maintain a strong, visible, and robust enforcement presence directed at these and other similarly situated noncompliant taxpayers if our tax administrative system is, to be honest, and fair,” the statement reads.
Are 87,000 Armed Agents Going to Be Hired?
The number of new agents who will be hired to conduct audits is not specified in the Inflation Reduction Act, even though the Treasury Department report from 2021 contains the figure of 87,000.
In that report, the Treasury Department stated that additional funding would enable the IRS to hire nearly 87,000 full-time staff members by 2031 to help the agency crackdown on sophisticated tax evasion; update outdated technology to help the IRS better identify tax evaders and serve taxpayers, and further regulate third-party tax preparers working in collusion with tax evaders.
The Treasury estimated that over the following ten years, these investments would generate an additional $700 billion in tax revenue.
According to the report, “this revenue is backloaded in the 10-year budget window as several of these new investments — like hiring revenue agents capable of challenging international high net worth examinations and building the technological infrastructure to support a new information reporting regime — take years to reach their full potential.”
The report also stated that after 20 years, the revenue totals $1.6 trillion.
Was the $725,000 the IRS spent on ammunition?
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Rep. Matt Gaetz of Florida’s Republican congressional delegation informed Fox News in June that the IRS had bought weapons worth hundreds of thousands of dollars.
“I picture the IRS as having desks with green eyewear rather than breaking down doors and shooting Americans with Glocks. The fact that the IRS spent around $725,000 on ammo in 2022 alone is undoubtedly concerning.
Undoubtedly, the IRS Criminal Investigation section did spend $693,000 on ammunition in 2022. But from 2010 to 2017, it did this every year, spending an average of $675,000 on ammunition.
A federal law enforcement organization called the Criminal Investigation division has roughly 200 sworn agents that look into tax evasion, money laundering, cybercrimes, and organized crime involvement.