Report: FY 2022 IRS audits targeted mainly low-income Americans

January 8, 2023

Included in President Joe Biden's so-called Inflation Reduction Act was the appropriation of funds to hire 87,000 new IRS agents, and, if the coming years are anything like 2022, the agency will likely use those resources to continue targeting mainly lower-income Americans for audit, as Reason reports.

The startling statistics on IRS activity in fiscal year 2022 were released last week by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University.

IRS targeting poor

According to the data, it was not millionaires and billionaires that received the lion's share of IRS audit attention, but rather low-income Americans who claimed the earned income tax credit.

Those taxpayers, according to TRAC, were audited at a rate five and a half times that of the rest of the nation.

Blasting the present state of affairs, TRAC suggested that the low-earning individuals most likely to receive this type of scrutiny are “easy marks in an era when [the] IRS increasingly relies upon correspondence audits yet doesn't have the resources to assist taxpayers or answer their questions.”

Correspondence audits are examinations via mail, and as Reason noted, they are simpler and less expensive to initiate than audits involving visits with a revenue agent, and, as such, are routinely used in cases involving poorer taxpayers.

Debatable claims

Though the inclusion of $80 billion for the IRS in Biden's Inflation Reduction Act drew the ire of Republicans last year, Democrats continued to insist that the influx of money would be used to address, as Fox News noted at the time, “declining customer service” and to pursue cases of tax evasion.

Rep. Gwen Moore (D-WI) vowed, “The Inflation Reduction Act increases IRS tax enforcement funding to go after sophisticated wealthy individuals and large corporations who dodge taxation, so they can finally pay their fair share, too.”

“Unlike the GOP's $2 trillion tax giveaway to the wealthy and big corporations, our tax policies will deliver a fairer tax system for working people,” Moore added.

Those assurances stood in stark contrast to warnings from Republican lawmakers, who asserted that the beefed-up agent ranks would instead launch a crackdown on small businesses and poorer wage-earners, contending that Americans earning under $75,000 per year would be the target of 60% of additional audits funded by the spending bill.

McCarthy pledges action

After finally prevailing in his quest to become speaker of the House, California Republican Kevin McCarthy has reiterated his pledge to combat some of what he feels have been President Joe Biden's most egregious policies, including increased funding for IRS agents, as CNBC reports.

In address to the House chamber early Saturday morning, McCarthy told the 118th Congress that in an effort to “be the check and provide some balance” to the president and his party, one of the top items on his to-do list is to repeal the aforementioned surge of cash to the IRS.

“Our very first bill will repeal the funding for 87,000 new IRS agents,” McCarthy told the assembled legislators, receiving thunderous applause from his side of the aisle.

Though such a measure stands little likelihood of passing in the Democrat-controlled Senate, time will tell whether it will provide useful leverage for Republicans later in the year when the question of raising the federal debt ceiling rears its head once more.

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