Elizabeth Warren Celebrates IRS Audits Of Middle-Class Taxpayers
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The Federal Government has collected more than $1 billion in overdue taxes from high-wealth taxpayers who dodged their obligations. Check out today’s @BostonGlobe story pic.twitter.com/U4RGjfLDId
— Elizabeth Warren (@SenWarren) July 12, 2024
While Warren singled out wealthy tax dodgers as the target of the IRS’s army, the agency has increasingly looked to middle-class taxpayers, in addition to small businesses and independent contractors, as a source of increased revenue.
The IRS made a concerted effort last year to ramp up auditing of lower- and middle-income earners, launching nearly 1 million examinations compared to the fewer than 400,000 audits it conducted of high-income earners, according to its enforcement statistics.
audits of taxpayers earning less than $200,000 made up nearly 70% of the total initiated by the IRS in the last fiscal year. By contrast, the agency audited taxpayers earning $200,000 or more at a rate of 22.1%.
The Biden administration requested a $1.2 billion increase in funding for the IRS in fiscal year 2023, which included funds for ramping up enforcement activities against middle-income Americans while also targeting high-income earners.
The IRS requested $535 million to increase enforcement staff for fiscal year 2023, spurred by the belief that a “modest increase in the audit rate for taxpayers with incomes over $1 million can generate billions in additional revenue,” according to the agency’s budget projection.
Warren initially balked at the $1.2 billion requested by the administration, calling for a more significant investment of $10 billion annually over the next decade. The Massachusetts senator said the $15 billion over the decade proposed in the IRS funding package was necessary to “rebalance the scales” and assert “that nobody is above the law.”
The Internal Revenue Service (IRS) is using a new army of tax collectors to conduct mass audits of middle-income earners after Democrats promised additional resources would only be used to target the rich.
On Thursday, Sen. Elizabeth Warren, D-Mass., celebrated the federal government’s collection of more than $1 billion in taxes from “high-wealth taxpayers” as a triumph for the agency’s radical expansion under President Joe Biden.
“Democrats boosted IRS funding, and it’s already gotten back $1 BILLION from millionaire tax cheats,” the Massachusetts senator wrote in response to a story in The Boston Globe. “Republicans want to cut IRS funding again to protect their rich tax-dodging buddies — no way.”
A columnist for the paper trumpeted by Warren, however, pointed out that “Buried deep in the same story: Two-thirds of IRS audits initiated last year were on taxpayers making less than $200,000.”
In fact, the note on IRS middle-class audits is highlighted at the end of The Boston Globe’s story, which is headlined, “IRS collects milestone $1 billion in back taxes from high-wealth taxpayers.”
“Demian Brady, vice president of research for the National Taxpayers Union Foundation — says the IRS still targets non-high-wealth partnerships for audits,” the Globe reported.
“It should also be noted that nearly two-thirds of audits initiated in 2023 were on those making less than $200,000,” Brady told the paper.
In April, The Wall Street Journal editorial board reported on a review of the federal tax agency’s auditing practices, which found 63 percent of new government inquiries were to middle-income earners who made less than $200,000.
“Only a small overall share reached the very highest earners, while 80% of audits covered filers earning less than $1 million,” wrote the editorial board of The Wall Street Journal. “Don’t forget to save those charitable-giving receipts.”
Congress beefed up the IRS with an army of 86,000 new tax collecters in the 2022 “Inflation Reduction Act” (IRA). The Treasury Inspector General for Tax Administration (TIGTA) reported in March that new employees were “not to be used to increase the share of small businesses or households below the $400,000 threshold that are audited,” but the agency “did not include specifics on how the IRS was going to ensure it met this commitment.”
In 2022, Treasury Secretary Janet Yellen pledged, “contrary to the misinformation from opponents of this legislation,” that “small business or households earning $400,000 per year or less will not see an increase in the chances that they are audited.”
Except if audits are going up overall under an agency with nearly 100,000 new auditors, then everyone’s chances of being audited have gone up, with the IRS still targeting middle- and lower-income Americans for the majority of audits. A report from Syracuse University published in March 2022 shows the IRS already audits the poorest Americans at a rate five times higher than other Americans. “Empowering the IRS” was the whole point of the agency expansion two years ago.
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