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Regulation and Compliance > Federal Regulation > IRS

New GOP Bill Blocks IRS From Boosting Audits of ‘Middle-Class’ Taxpayers

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House Republicans introduced legislation late Thursday that would prevent the Internal Revenue Service from using its $80 billion budget boost to audit the returns of taxpayers with taxable incomes below $400,000.

The bill was introduced by Rep. Kevin Brady, R-Texas, ranking minority member on the House Ways and Means Committee and is co-sponsored by every Ways and Means Republican. Senator Mike Crapo, R-Idaho, has introduced companion legislation in the Senate.

The Inflation Reduction Act — signed into law by President Joe Biden on Aug. 16 — injects the Internal Revenue Service with $80 billion in new funds. The big question now is how the agency will use it.

“No matter what they deny, Democrats in Washington are unleashing an army of IRS agents on middle class taxpayers who work hard and don’t deserve to be harassed,” Brady said in a statement.

Republicans have argued that the IRS will send an “army” of 87,000 IRS agents to conduct more than 700,000 new audits a year. Both claims have been debunked.

“It is wholly inaccurate” to describe the $80 billion budget boost as being used to increase “audit scrutiny of the middle class or small businesses,” Natasha Sarin, a Treasury Department official, told Time.

“The funds would cover a wide range of positions including IT technicians and taxpayer services support staff, as well as experienced auditors who would be largely tasked with cracking down on corporate and high-income tax evaders,” Time reported, citing Sarin.

The 700,000 audit figure was extrapolated from a blog post from the Congressional Budget Office that was “not intended for such calculations,” The Washington Post reported, citing the CBO.

President Joe Biden and top Democrats maintain that the beefed-up IRS will only institute more audits on those earning more than $400,000 per year.

Shai Akabas, director of economic policy at the Bipartisan Policy Center, told ThinkAdvisor in August that “it’s hard to believe that not a dollar of that new activity will reach lower- or middle-income individuals, but I certainly wouldn’t expect an army of new IRS agents going after the middle class.”


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