Silver State Times

Pundits of the Inflation Reduction Act say it will provide the IRS with more agents to conduct more audits.

The Inflation Reduction Act of 2022 was passed in a 51-50 vote in August. All 50 Democrat senators, including Sen. Catherine Cortez Masto (D-NV), voted for the bill and none of the 50 Republican senators voted for the bill. The bill allocated $80 billion to the IRS which critics say will go towards hiring 87,000 new IRS auditors.

According to Fox Business, Americans making less than $75,000 per year will receive the majority of IRS audits. A Fox analysis found the IRS will add 1.2 million more audits on American tax returns. Fox Business reports the IRS is expected to increase revenue by $124 billion. Responding to critics, IRS Commissioner Charles Rettig said audits would not increase with the passing of the Inflation Reduction Act.

In an August tweet following the passing of the Inflation Reduction Act, Sen. Mike Crapo (R-ID) said, “Make no mistake: American taxpayers of all income levels should brace for more audits, investigations and tax enforcement under the massive new IRS funding increase. Taxpayers deserve better services, not broken promises.”

According to the Washington Post’s Fact Checker, the 87,000 new hires "lacks significant context,” as it comes from a May 2021 Treasury report that indicates approximately $80 billion in funding would allow for the hire of 86,852 new employees over the next 10 years.

The Treasury Report says the new employees would be added in groups of 7,000-12,000 every year, and “would conduct audits, improve informational technology and enhance customer service”, according to the Washington Post.

The IRS has been historically underfunded, the Fact Checkers claim, leading to extended time to process tax returns and underdeveloped technology. Their assessment is that the IRS will grow 25-30% due to the Inflation Reduction Act and they doubt Republicans' claim that it will double in size.

House Republicans released their “Commitment to America” agenda that outlines the top priorities if they win the House in the upcoming midterms. The House Republicans tweeted, “The first thing we will do when we earn back the House this November is to repeal the 87,000 IRS agents Joe Biden and House Democrats’ hired.”

In an interview with the Center Square, Karen Kerrigan, president and CEO of the Small Business and Entrepreneurship Council, said, “There is no doubt that boosting IRS audit capabilities through a vast increase in the hiring of 87,000 new staff focused on this effort will hit small businesses the hardest. The tax data shows that it is small businesses of moderate means, not ‘the wealthy,’ that are targeted most frequently."

According to the Small Business Administration (SBA) as of 2020, there are 283,333 small businesses making up 99.2% of total Nevada businesses. There are 503,144 small business employees which make up 42.2% of Nevada employees.

According to CBS News, the IRS targets households earning $25,000 per year or less, five times more than others. The CBS News article claims audits are going down with a limited number of IRS employees, however, the article was published in March of this year, before the Inflation Reduction Act was passed. "It's unbelievable, the focus and targeting on the poorest families," Susan B. Long, co-director of TRAC and a professor of managerial statistics at Syracuse said. "It's five times the rate for everyone else — does this really make sense?"