As the midterm campaigns come to a close, Republican lawmakers are seizing on misleading claims warning that Democrats are recruiting an army of tax auditors, finding new resonance in an assertion debunked months ago.
The assertion began to circulate when President Joe Biden first outlined a wide-ranging social spending plan last fall. A whittled-down version of that plan, known as the Inflation Reduction Act, was enacted this summer, fueling a new wave of attacks that have gained momentum as the elections neared.
That law provides the IRS with nearly $80 billion in funding, including $45.6 billion for enforcement activities. But the suggestion that this would amount to 87,000 additional tax collectors scrutinizing the financial filings of middle-class Americans is wrong.
Here’s a fact check.
What Was Said
“When House Republicans earn the majority, we will STOP Biden’s army of 87,000 IRS agents hired to audit hardworking American families and small businesses.”— Rep. Elise Stefanik, R-N.Y., in a tweet in November.
“Senate Democrats could have secured the border to protect you and your family. They didn’t. Instead, they hired 87,000 IRS agents to audit you.”— Senate Republicans’ official Twitter account in November.
“$80 Billion: Increased IRS Funding. 87,000: Full-Time IRS Agents Added Using $80 Billion in Funding. 710,000 New Audits on Taxpayers Making $75,000 or Less.”— a graphic Tiffany Smiley, the Republican candidate for Senate in Washington, shared on Twitter in October.
These claims are misleading. The 87,000 figure refers to a May 2021 estimate from the Treasury Department of the total number of employees — not just auditors — the IRS proposes to hire over the next 10 years with funding requested by Biden. And while the IRS plans to conduct more audits, wealthy Americans and businesses will bear the brunt of that scrutiny, not, as Republicans have suggested, working families.
Among the IRS’ workforce of about 79,000 employees, 10,000 are actually agents. (Of those, 8,000 are revenue agents who audit tax filings and 2,000 are special agents who investigate potential tax crimes.) In fact, the two most common IRS jobs have little to do with tax auditing or investigations: about 13,000 are customer service representatives who answer taxpayer phone calls and 10,000 are seasonal employees who file mail or transcribe data. Other jobs include lawyers, examiners, technicians and appeals officers.
The additional funding for the IRS will allow the agency to modernize its infrastructure and replace an aging workforce, and it is unclear just how many full-time employees or agents will be hired in the next decade, Treasury Department officials said. The majority of those new employees will replace the 52,000 expected to retire in the near future, the officials said, and many will focus on customer service and updating the agency’s technology infrastructure — not investigating the finances of ordinary Americans.
In other words, the funding will enable the IRS to increase its workforce over the next 10 years to 113,000 employees. That is about the same number of workers it employed annually in the early 1990s.
In a September speech, Treasury Secretary Janet Yellen outlined some of that hiring — an additional 5,000 customer service representatives and fully staffing the agency’s taxpayer assistance centers — and committed not to raise audit rates for households making less than $400,000 a year.
Using historical audit rates, House Republicans estimated this summer that the additional funding will correspond to 710,000 new audits for taxpayers making $75,000 or less — as Smiley, the Republican candidate for Senate in Washington state, tweeted. But those calculations ignore the proportional effect on each income bracket.
In the past decade, tax audit rates have fallen most starkly for higher income earners, which the IRS attributes to diminished resources and therefore its inability to retain specialized auditors needed to examine the filings of the wealthy.
Increasing funding for the IRS, the nonpartisan Congressional Budget Office said in September 2021, would address those needs and result in increased audit rates for everyone, particularly for high-income earners.
The IRS examined 1.4 million individual income tax returns in 2010, about 1% of the total number filed. In 2018, the latest year with available data when Republicans started making these claims, audits decreased to 370,000, or about 0.2%.
The budget office estimated increasing IRS funding would return enforcement to its 2010 levels. Doing so would result in about 1.2 million more audits; of those, 583,000 would target people making less than $75,000.
But that is because a vast majority of tax filers — about 70% — make under that threshold. Looking at what fraction of returns are examined by income group, rather than the sheer number, shows that wealthier taxpayers would have a better chance of being audited than lower-income earners under the law.
Under 2010 levels of enforcement, about 0.5% of returns reporting between $1 and $75,000 in income would be audited, as would 1% of those with more than $75,000 in income. In comparison, those rates were 0.3% and 0.1% in 2018. For those making more than $10 million, more than 20% of returns would be examined under 2010 levels, compared with 5.3% in 2018.
It is also worth noting that of those 710,000 additional audits cited by Republicans, about 127,000 would target those with “no positive income,” such as those who report negative business income or capital losses. Including these filers with lower-income taxpayers is also misleading, as they actually receive more audit scrutiny than any other income group outside of those making more than $5 million annually.
In a statement in support of the law released this summer, three former IRS commissioners appointed by Republican and Democratic presidents disputed claims about increased scrutiny. The law would add “the capacity to enforce the tax laws against sophisticated taxpayers who today evade their tax obligations freely,” they said, “because they know that the IRS lacks the tools it needs to pursue them.”
This article originally appeared in The New York Times.
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