WASHINGTON — Charles P. Rettig, the Internal Revenue Service commissioner, told Congress on Thursday that the tax collection agency would not increase audits of households earning less than $400,000 if it was given the additional $80 billion that lawmakers were considering in a proposed climate and tax legislation package.
Providing more funding for the I.R.S. has been a top priority of the Biden administration and has emerged as key way to finance some of the policies that Democrats are proposing without raising individual tax rates. The additional funding is expected to go toward hiring more enforcement agents to crack down on wealthy tax evaders and corporations and to modernize the agency’s antiquated technology.
“These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans,” Mr. Retting wrote in a letter to lawmakers. “As we have been planning, our investment of these enforcement resources is designed around Treasury’s directive that audit rates will not rise relative to recent years for households making under $400,000.”
That commitment is in keeping with President Biden’s promise not to raise taxes on middle-income Americans.
Mr. Rettig added that better technology and customer service at the I.R.S. would make honest taxpayers less likely to be audited.
The I.R.S. funding is projected to raise $124 billion in additional tax revenue over a decade. Treasury Department officials believe that this estimate is overly conservative and that an agency with more robust audit abilities will deter tax cheats.
Democrats are expected to consider the additional funding as part of a new package, the Inflation Reduction Act, which includes raising taxes on corporations and lowering prescription drug costs, among other provisions. The overall package has garnered stiff opposition from Republicans and would need every Senate Democrat to support it in order to pass.
Among the provisions that Republicans oppose is the I.R.S. funding. Republicans have a long history of trying to starve the I.R.S. of funds and have complained for years that it is being used as a political weapon and unfairly targets conservative groups.
The agency’s scrutiny has crossed party lines, according to the I.R.S. inspector general. But it came under fire again last month after The New York Times reported that James B. Comey, the former F.B.I. director, and his deputy, Andrew G. McCabe — both perceived enemies of former President Donald J. Trump — faced rare, exhaustive audits during the Trump administration. The I.R.S. said Mr. Rettig had not been involved in the audits.
In assailing the proposed legislation, the Republican National Committee claimed this week that an “army” of 87,000 I.R.S. agents would “disproportionately target poorer Americans.”
Mr. Rettig, whose term expires later this year, insisted on Thursday that those suggestions were unfounded.
“Large corporate and high-net-worth taxpayers often engage teams of sophisticated representatives pursuing unsettled or sometimes questionable interpretations of tax law,” he said. “The integrity and fairness of our tax administrative system relies upon the ability of our agency to maintain a strong, visible, robust enforcement presence directed to these and other similarly situated noncompliant taxpayers.”
Source: NY Times
