Still, hiring more than 86,000 workers over 10 years could be a huge increase for the IRS, which currently has nearly 80,000 employees. But that figure accounts for all workers, not solely enforcement agents. The Treasury Department did estimate in 2021 that a nearly $80 billion investment in the IRS could allow the agency to hire 86,852 full-time employees over the course of a decade. The Republican National Committee and several Republican lawmakers have criticized the new IRS funding, claiming that it will provide the agency with an “army of 87,000 new IRS agents.”īut that number is misleading. Roughly $3 billion would be allocated for taxpayer assistance, filing and account services.
Nearly $4.8 billion would be used for modernizing the agency’s customer service technology, like developing a callback service. More than $25 billion would be allocated to support IRS operations, including expenses like rent payments, printing, postage and telecommunications.
More than half, about $45.6 billion, would go toward strengthening enforcement activities – including collecting taxes owed, providing legal support, conducting criminal investigations and providing digital asset monitoring, according to the bill text. The $80 billion would be spread across four different areas of the IRS over the next decade. The new funding would result in a more than 50% increase in IRS funding adjusted for inflation, Holtzblatt said. The IRS received nearly $12.6 billion for fiscal year 2022. The Inflation Reduction Act would provide nearly $80 billion to the IRS over 10 years, in addition to the money the agency normally receives from Congress on an annual basis. Here’s what it could mean to taxpayers if the IRS gets an increase in funding: You want the IRS to select the businesses and people for audits who really have not been compliant,” said Janet Holtzblatt, senior fellow at the Urban-Brookings Tax Policy Center. “The goal should not only be to increase audits, but improve the productivity of audits. “The IRS has for too long been unable to pursue meaningful, impactful examinations of large corporate and high-net-worth taxpayers to ensure they are paying their fair share,” Rettig wrote in a letter sent to lawmakers last week. It’s ultimately up to the IRS how the money is used. What's in the Manchin-Schumer deal on climate, health care and taxesīut some Republicans are attacking the proposed increase in IRS funding, arguing that it would leave more middle-class Americans and small businesses with the headache of facing a tax audit.ĭemocrats, and Rettig – who was appointed by former President Donald Trump – have said repeatedly that the intent is not to target the middle class but instead focus on making sure wealthy tax cheats comply with the law. (Kent Nishimura / Los Angeles Times via Getty Images) Kent Nishimura/Los Angeles Times/Getty Images
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Capitol Building, photographed during a series of amendment votes, also called "vote-a-rama, on the Inflation Reduct Act at the U.S. The IRS is still playing catch-up, having started the year with a backlog of 11 million unprocessed tax returns. The agency’s struggles became even more apparent to taxpayers during the Covid-19 pandemic when it could not keep up with filings. As a result, staffing levels and audit rates have been declining for years. The agency’s budget has shrunk by more than 15% over the last decade. IRS Commissioner Charles Rettig, along with his predecessor, have asked Congress for additional funding. The funding would help support the work of the IRS – including but not limited to audits – and in turn, is expected to bring in more federal tax revenue to help offset the cost of the Democrats’ plan to lower prescription drug costs and combat climate change. After months of negotiations over the sweeping spending package, the Senate passed the bill earlier this month, sending the legislation to the House for a vote before it reaches President Joe Biden’s desk. The Democrats’ Inflation Reduction Act calls for delivering nearly $80 billion to the IRS over 10 years. The Internal Revenue Service is finally about to get the additional funding its officials have long been waiting for.
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