Friday the House of Representatives is meeting in an unprecedented mid-August session to consider legislation Democrats have dubbed the "Inflation Reduction Act." Economists agree this massive spending package will do little to nothing to curb our 8.5% inflation rate. This package will, however, vastly expand the power of the Internal Revenue Service (IRS) to conduct costly audits of families and family businesses.
Historically, the IRS has estimated voluntary tax compliance hovers around 80 percent. At the end of Fiscal Year 2021, the IRS employed 15,482 customer service representatives and over 24,000 revenue agents, tax examiners, revenue officers, special agents, and attorneys.
According to the Taxpayer Advocate Service, some 21.3 million paper tax returns were waiting to be processed as of May 31. As a result, millions of taxpayers are seeing extended waiting periods for their returns and refunds to be processed. And don’t expect your call to the IRS to be answered when you have a problem – the National Taxpayer Advocate also found the IRS successfully answered only 1 out of every 10 phone calls during the 2021 tax filing season.
Internal Revenue Service federal building Washington DC USA (istock)
It is abundantly clear the agency is not serving taxpayers as intended. This begs the question why Democrats’ latest bill, the Inflation Reduction Act, includes $80 billion for the IRS – over $45 billion for new audits and enforcement and a mere $3.2 billion for taxpayer services.
Democrats frequently talk about making the "rich" pay their "fair share," but the Senate Finance Committee found only 4-9 percent of taxpayers making over $500,000 would see additional audits under this bill. So, who will bear the brunt of Democrats’ IRS stimulus? According to the same analysis, it’s the taxpayers making $50,000 or less who will make up between 40 and 57 percent of the enforcement funded in this bill. They should call this bill Build Bigger Bureaucracy.
The truth is this bill paves the way for more audits for hardworking Americans who can least afford them. The non-partisan Congressional Budget Office projects a rise in audit rates for "all taxpayers," returning audit rates to "the levels of about ten years ago." An analysis conducted by the House Ways and Means Committee found this will result in roughly 1.2 million new audits each year. Worse, 710,000 of those audits would fall to taxpayers making $75,000 or less.
The IRS doesn’t need more enforcement – and families struggling under record-high inflation don’t need more audits. They need better customer service from a responsive, accountable IRS. That’s why I signed on as a cosponsor of an amendment led by my colleague, Rep. Greg Murphy, M.D., to prohibit the use of additional IRS funds from being used for audits of taxpayers with taxable incomes below $400,000. Unsurprisingly, Democrats would not allow this amendment to be considered on the floor.
So I went to the House floor to ensure none of the funding in this bill would go toward enforcement. My proposal was simple: let’s help low- and middle-income Americans get their tax returns processed while ensuring 87,000 agents aren’t knocking on new doors by removing the audit funding from the bill, leaving in place the enhanced funding for IRS customer service.
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Under the procedure through which I attempted to offer this amendment, my proposal to protect American families from new audits could have been considered with limited delay to final passage. With just over 15,000 customer service representatives and over 24,000 IRS employees working on enforcement, it’s clear where Congress should focus resources.
Still, Democrats voted no. They would rather ramp up audits than make sure Americans have an IRS that works for them.
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Democrats should work with Republicans to ensure the Taxpayer Bill of Rights is enforced, particularly taxpayers’ Rights to Quality Service and to a Fair and Just Tax System. The IRS needs oversight and reform – not a $45 billion slush fund for auditing low- and middle- income Americans.
It’s a shame my friends across the aisle don’t feel the same way.