What an $80 billion funding increase for the IRS could mean for taxpayers

WASHINGTON (NewsNation) — Under the Inflation Reduction Act of 2022, the Internal Revenue Service will spend an additional $79.6 billion over the next 10 years to help the agency deal with the backlog of unprocessed paper returns and recruit to target the country’s top earners.

The act, which is expected to pass the House before going to President Biden’s desk for signature, would add 87,000 new IRS agents to the agency’s roster. It is expected to help speed up the processing of refunds that some taxpayers have been waiting as long as 10 months to receive.

Democratic sponsors of the legislation said it also targets wealthy people who cheat on their taxes, with $46 billion of the $80 billion earmarked for audits.

Ben Wilkerson, managing attorney at North Mississippi Legal Services, said these audits are sometimes skewed against lower-income people.

“There’s no rhyme or reason that I can understand about who gets audited,” he said.

Wilkerson has helped hundreds of low-income families affected by IRS audits. He said pursuing those individuals is less work and is done faster — while wealthier senders have the resources to fight the agency.

A recent study from Syracuse University found that the poorest families were audited five times more often than everyone else.

This figure compares to only 2% of millionaires who were audited in 2021.

Syracuse professor Susan Long said the Inflation Reduction Act could give the agency the manpower it needs to change that practice.

“It’s really revolutionary,” she said. “Because year after year the IRS has been under-resourced but getting more and more duty as we’ve seen and done things. You know, it takes steps; that’s how the world goes.”

IRS Commissioner Charles Rettig said in a letter to the Senate last week that the resources from the Inflation Reduction Act “are in no way to increase audit scrutiny of small businesses or middle-income Americans.” Instead, it would return the IRS “back to historical norms in areas of challenge to the agency,”

The funds will also go toward “employees and IT systems that will allow us to better serve all taxpayers,” Rettig wrote.

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