We are happy to have you join us for this episode of The World and Everything in It. I’m Myrna Brown, good morning.
Paul Butler is the host. Paul Butler is who I am. The World and Everything in It begin with worries about the IRS.
The “Inflation Reduction Act,” which the President signed last week, permits the Internal Revenue Service to substantially boost its budget. The IRS will use those funds, say, critics, to hire agents who will target the middle class with audits and seizures.
BROWN: Leo Briceno, a reporter for WORLD, has just joined us from Washington. good morning
ALEX BRICENO, REPORTER: good morning Gratitude for having me.
BROWN: Leo, you looked into the allegations that the IRS may be hiring additional staff with the money they are scheduled to receive. Can you give us an example of what that may entail?
BRICENO: Sure, there have been a lot of worries, particularly from fiscal conservatives, that the IRS may hire up to 87,000 new personnel with the cash made possible by the Inflation Reduction Act.
Over a ten-year period that will finish in 2031, they have collected close to 80 billion USD. The IRS could increase its present workforce by twofold with that amount of money.
And conservative legislators have been quite cautious about that. The Inflation Reduction Act’s detractors frequently bring up the figure of 87,000 in their arguments. Sen. John Thune of South Dakota is shown here speaking on the measure during a floor debate:
THUNE: Madame President, $80 billion for an additional 87,000 jobs at the IRS. 87,000 people. Around the nation, tax agents will be relocating into homes with families.
BROWN: Given that this amount is substantial, has the IRS declared its intention to hire 87,000 personnel?
BRICENO: Not directly, no. The IRS aims to accomplish this goal, although that amount is more of an estimate than a specific strategy.
In a 2021 Report, the IRS projected a decade into the future what kind of improvements it would require in terms of staff, technology, and resources to keep up with emerging tax evasion techniques.
According to the research, the IRS could hire up to 87,000 people in a decade with the help of an $80 billion grant from Congress.
Accordingly, using the IRS’s current operational model, that number represents the number of personnel the IRS may require in 2031. That doesn’t imply that they’re obligated to hire a large number of individuals.
But you can see why people are worried; the IRS received all they requested, and as a result, people can’t help but assume that since they now have the money, they will carry out their stated plans.
Brown says, “I see. Consequently, what would these new employees be doing?
BRICENO: For the time being, I’m plugging the gaps the IRS has. However, the IRS anticipates that this additional staff will eventually contribute to the collection of up to $200 billion in legally due taxes by the end of ten years.
The IRS claims that a significant amount of taxable income is now eluding them, but if they increase their inspection, they may be able to support the government’s finances. Currently, they are trying to locate that sum by doing more audits on Americans who earn more than $400,000 yearly, which is quite problematic.
Why is that an issue? BROWN?
BRICENO: You have to wonder, I suppose. Are there enough Americans earning $400,000 to audit to bring in $200 billion over ten years? In ten years, things might be different, but for the time being, not everyone is confident.
At the Grover M. Hermann Center for the Federal Budget of the Heritage Foundation, senior research fellow Rachel Greszler was the person I spoke with. If the IRS plans to solely expand audits for persons making $400,000 or more, she claims that amount is a bit of a long shot.
GRESZLER: Well, just the entire amount of new money they anticipated would be generated by these audits is enormous. After that, you can ask yourself if there really is that much money at the top and that much is being avoided, whether on purpose or accidentally.
Yeah, I just don’t see them being able to create $204 billion in additional enforcement revenues if they’re only going to use that new cash to pursue those who make more than $400,000. Based on their own disclosures of the amount received from subsequent audits, it simply doesn’t seem like the money exists.
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BROWN: What will the IRS do if it is unable to find the numbers it claims to be able to?
BRICENO: That is a valid query. I’m not sure if there is an immediate, definitive response to it. In contrast, if they fall short of their forecasts, the federal government will have less money to work with or the IRS would need to identify more people to audit and more loopholes to eliminate.
Brown: Leo Briceno, many thanks.
Thank you for having me, BRICENO.