Why is the IRS hiring 87,000 new tax agents?
What you need to know about the new $739 billion bill soon to land on President Biden’s desk
You may have seen a war of words from high-profile personalities from both sides of the aisle recently — including the above tweet by Elon Musk — about a bill called the Inflation Reduction Act of 2022, which Senate Democrats passed (51–50) on Sunday, and which the House approved today with a similar party-line vote of 220 to 207.
The bill, which is now moving onto is a $739 billion budget reconciliation with spending packages addressing climate, health and taxes, including nearly $80 billion in funding for the IRS — $45.6 billion of which is earmarked for “enforcement.”
This news quickly ruffled feathers with concerns on the right of the IRS targeting the middle class and small businesses.
In an August 9th tweet, House Minority Leader Kevin McCarthy claimed that “Democrats’ new army of 87,000 IRS agents will be coming for you” if you “earn less than $75k.”
Several other Republicans jumped on Twitter to sound similar warnings including: Representative Jim Banks, Senator Marco Rubio, and Newt Gingrich.
In a letter meant to reassure the Senate, IRS Commissioner Charles Rettig wrote that the new resources are “absolutely not about increasing audit scrutiny on small businesses or middle-income Americans,” but rather will lead to “enhanced IT systems and taxpayer service will actually mean that will be better able to comply with the tax laws, resulting in a lower likelihood of being audited and a reduced burden on them.”
In a recent press brief, White House press secretary Karine Jean-Pierre reiterated Mr. Rettig’s claim that the bill would not raise taxes on people making under $400,000 a year.
Instead, as Rettig claims in his letter, “the resources in the reconciliation package will get us back to historical norms in areas of challenge for the agency — large corporate and global high-net-worth taxpayers — as well as new areas like pass-through entities and multinational taxpayers with international tax issues, where we need sophisticated, specialized teams in place that are able to unpack complex structures and identify noncompliance.”
The bill, which was just approved by congress today, also includes budgets to “reduce the cost of prescription drugs and pour billions of dollars into the effort to slow global warming,” reported Emily Cochrane of The New York Times.
So where does the 87,000 new IRS employees figure come from?
The 87,000 number appears to come from a May 2021 Treasury Department report, which estimated that were there to be significant investment of resources into the Internal Revenue Service, it would “enable the agency to hire roughly 87,000 employees by 2031.”
According to Treasury Department counselor for tax policy and implementation Natasha Sarin in a comment to Time Magazine, “It is wholly inaccurate to describe any of these resources as being about increasing audit scrutiny of the middle class or small businesses.”
So it appears that the bill, for which the largest spending provision is $370 billion to combat climate change, is a major step forward for the Democrats’ policy goals while Republicans remain skeptical about the ramifications for middle-income tax-payers and small business owners.
For more on the ins and outs of the bill, check out a side-by-side comparison of a variety of news sources here.
