Biden spending bill's IRS tax enforcement plan will cause audits to double, House GOP memo says
Republicans say more audits will negatively impact low- and middle-income Americans
FIRST ON FOX: Expanded IRS tax enforcement provisions included in President Biden’s social spending bill will cause audits to double over the next 10 years, according to a Republican memo distributed by House Minority Leader Kevin McCarthy, R-Calif., to GOP lawmakers on Thursday morning.
Penned by Republican members of the tax-writing House Ways and Means Committee, the memo asserts Biden’s tax enforcement plan will result in an additional 1.2 million IRS audits each year. Nearly half of the audits would impact families earning less than $75,000, while roughly one-quarter of the audits would affect Americans earning up to $25,000 per year. The Republicans say the plan will also result in 800,000 more federal tax liens against taxpayer property, including homes and vehicles.
"President Biden wants to double Americans' chances of getting audited in order to squeeze every single dollar they can from American families and small businesses to fund the most expensive piece of legislation in history," McCarthy said in a statement. "This would be a nightmare state for families living in fear of an army of IRS bureaucrats designed to second-guess and spy on them."
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"Low and middle-income families are already struggling due to the inflation caused by Biden's runaway spending, and Democrats' spending spree is exactly the opposite of what the American people need right now," he added.
The GOP memo’s assertions are largely based on past CBO estimates and IRS audit data, not the CBO’s current scoring process, which has yet to be completed. The president and other proponents of the tax plan say enhanced enforcement is necessary to crack down on wealthy tax cheats and close the so-called "tax gap," or the difference between what Americans cumulatively owe and what the IRS collects.
The Biden-backed proposal slated for inclusion in the spending bill would earmark approximately $80 billion in funding for the IRS over a 10-year period. Nearly $79 billion would be used to bolster tax enforcement efforts, hire more IRS agents, conduct more audits, improve taxpayer support services and modernize outdated technology.
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In September, the nonpartisan Congressional Budget Office estimated that an expanded IRS would yield an additional $200 billion in revenue over the next decade, or net income of $120 billion given the expansion’s cost.
The CBO found the proposal, if enacted, would "return audit rates to the levels of about 10 years ago; the rate would rise for all taxpayers, but higher-income taxpayers would face the largest increase."
Republicans, including Ways & Means Ranking Member Kevin Brady, R-Texas, say the proposal is invasive and harmful to both families and small businesses.
"Even the top congressional scorekeeper finds that Democrats’ dangerous $80 billion expansion of the IRS more than doubles Americans’ chances of being audited," Brady said in a statement. "As so-called ‘moderates’ move towards passing this bill, they need to know that farmers, families, and small businesses will be the true targets of intensified auditing."
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The Biden administration expects enhanced IRS funding and enforcement to generate $400 billion in new revenue to help cover the spending bill’s social and climate programs, more than any other offset included in the legislation. The president and top Democrats say the spending bill’s cost of approximately $1.75 trillion will be fully covered.
The CBO’s final projections for the spending bill’s costs and offsets are expected to be released Friday. But earlier this week, CBO Director Phillip Swagel reiterated the enhanced IRS enforcement would raise about $120 billion through 2031, well short of the White House’s $400 billion target.
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White House officials say the tax enforcement proposal is not directed at low- and middle-income Americans.
"Additional enforcement resources will be focused on pursuing those with the highest incomes; not Americans with income less than $400,000," a White House fact sheet on the "Build Back Better Act" framework agreement says.
The House could vote on the legislation as soon as this week.