The erroneously titled Inflation Reduction Act, which was enacted by Democrats in the U.S. Senate, would not cut inflation.
The Internal Revenue Service (IRS) will get a substantial $80 billion over the next ten years to expand by hiring around 87,000 new agents. If only it meant they would start returning our calls, that would be great.
Increased enforcement, operational upgrades, customer service, and system modernization will be accomplished with the additional people and resources.
These adjustments are expected to raise more than $200 billion in total to pay for the bill’s healthcare and climate-related expenditures.
What’s most alarming about this feature of the Inflation Reduction Act is that it gives the IRS the authority to pursue industrious Americans, especially those with the least resources.
How the bill works? The IRS would get $80 billion under the Inflation Reduction Act, more than six times the $12.6 billion allocated to it currently.
According to the Ways and Means Committee, the following results will occur:
More than 1.2 million additional individual audits would be conducted annually.
Over 583,000 of these audits, or close to half of them, would involve Americans with annual incomes up to $75,000.
More than 800,000 additional federal tax liens will be placed on the taxpayer-owned property, including homes and vehicles.
Truth is withheld by the Biden administration.
The Biden administration is making an effort to allay Americans’ concerns that this army of new auditors will target lower- and middle-class families as they learn about them.
To discuss how the plan would affect taxpayers, White House economic adviser Jared Bernstein went on a Brian Sullivan-hosted CNBC program.
To be clear, does the president promise that no one earning less than $400,000 won’t be subject to an audit by the new agents? inquired Sullivan.
Non, non, non. I didn’t actually say that. According to Bernstein, the Inflation Reduction Act won’t result in higher taxes for anyone earning less than $400,000.
Who are they going to target if they expand the IRS twofold? inquired Sullivan, adding additionally minor companies.
Bernstein chose not to respond.
First, contrary to what Biden promised, tax rates would likely go up for middle-class and working-class households. The Joint Committee on Taxation estimates that the bill’s modifications to corporation taxes will result in tax increases for families making less than $400,000.
Second, Bernstein’s refusal to provide an answer to the issue of who would be subject to an audit reveals that the 87,000 new agents are not solely targeting Jeff Bezos, Elon Musk, or Mark Zuckerberg.
Already, the IRS targets the poorest people. The left thinks they can collect $200 billion from wealthy tax cheats in particular, but here’s what they’re not telling us: People making between $0 and $200,000 make up the majority of underreported income from individuals and small enterprises.
This is very important. Those who are already targets of the IRS are least able to defend themselves financially and through legal counsel. These audits are likely to increase as there are more agents on the case.
First of all, tax audits are incredibly uncommon. Only 4 of every 1,000 filed returns (0.4%) are audited. The number of audits of lower-income families, however, continues to be high even as the number of audits of higher-income households declines.
The poorest families were audited five times more frequently than the average family, according to a Syracuse University study.
The so-called “correspondence audits,” or letters from the IRS requesting supporting documents for a specific line item on a return, are what the IRS relies on the most.
One of the biggest welfare benefits, the earned income tax credit, was the focus of more than half (54%) of all correspondence audits conducted last year on taxpayers with incomes under $25,000. An average credit of around $2,500 was given to 26 million households in 2018.
In contrast, taxpayers with earnings between $200,000 and $1,000,000 only had a third as many chances of being audited as those with the lowest incomes from wages.
Tax audits are stressful, but they also put a hardship on taxpayers who are least able to afford tax specialists to help them through the audit.
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Many of these taxpayers are difficult to contact, which is a challenge when auditing them. According to an analysis of EITC beneficiaries whose income was audited, 64% of those whose wage income was under $10,000 a year provided no response at all. That rate dropped to 35% for those making more than $40,000 annually.
Americans have every right to be concerned about IRS expansions and their propensity to target low- and middle-income households.
The IRS’s customer service, meanwhile, is appalling. During the most recent tax season, only 11% of calls were handled by the IRS. The frustration of the taxpayers won’t be significantly reduced by this extra revenue.
Final Verdict
The poorest members of our society will likely continue to bear the brunt of the left’s attacks as they move up the economic scale, despite their assertions that they are targeting the wealthy to make up for lost tax contributions.
