WASHINGTON (AP) — After more than a decade of mostly losses, tax authorities can finally get the cash infusion it has long wanted in the economic package those are democrats working frantically to push through Congress before their break in August.
Under a deal worked out by Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin, the bill would spend an additional $79.6 billion on the beleaguered bureau over the next 10 years. The plan would generate an additional $203.7 billion in revenue for the federal government over that period, for a net profit of more than $124 billion, the Congressional Budget Office projects.
As the Senate prepares to vote on the bill in the coming days, the IRS proposal has become a magnet for GOP attacks, putting democratic unity to the test as they try to meet key priorities in the area of government. climate and health care prior to the autumn midterm elections.
Democrats say the IRS investment is needed to make sure businesses and wealthier Americans pay what they owe in taxes. But Republicans warn that this will lead to increased scrutiny of small business owners and others taxed enough.
The IRS has been largely on the losing end of congressional funding battles for the past twelve years. In April, IRS Commissioner Charles Rettig told Senate finance committee members that the agency’s budget has fallen by more than 15% in the past decade, taking inflation into account, and that the number of 79,000 full-time employees in last fiscal year was close. to the 1974 level.
The enforcement workforce has been hit even harder, declining by some 30% since 2010, although the number of cases has increased.
“Every measure important for effective tax administration has suffered greatly in recent years, with serious shortcomings due to underinvestment in human capital and information technology,” said Rettig.
sen. Tom Carper, D-Del., a longtime member of the Senate Finance Committee, said he hears the same thing every few years from IRS commissioners, regardless of whether they serve a Republican or Democratic government.
“They’re begging us to provide some resources to the IRS so they can do their job,” Carper said.
Democrats see an opportunity to change that. More than half of their proposed spending increase would go to enforcement. The next largest portion, $25.3 billion, would go to operational support such as rent, security and postage. Another $4.75 billion would go toward improving callback services and other technology designed to improve customer service. And $3.2 billion would go toward pre-filing and educational aid.
Senate Finance Committee chairman Ron Wyden, D-Ore., called the investment “essential as a tool to ensure we have rational tax policies.”
“This gives us the opportunity to increase the revenues of wealthy tax fraudsters who can’t pay what they owe,” Wyden said.
GOP lawmakers reject the plan, proposing a larger IRS as a means of harassing voters.
At a time of inflation, Democrats also want to spend $80 billion to roughly double the IRS so they can take more money from the American people through harassment and audits, and use taxpayers’ money to make taxpayers’ lives worse. Senate Republican Leader Mitch McConnell said Thursday in the Senate.
“I think it’s terrible for them to want to arm the Internal Revenue Service, to increase it in an effort to go after families and farmers and small businesses and try to raise more money,” Senator John Barrasso said. , R.-Wyo. “It’s basically a shakedown operation.”
One specific complaint is that the Democratic proposal should have devoted more resources to customer service rather than focusing on enforcement. The pandemic forced the IRS to temporarily close its processing facilities for health and safety reasons. That has led to unprecedented delays and challenges with the IRS still struggling to catch up.
“First, get good, honest taxpayers who are just trying to get basic help from the IRS,” said Senator Steve Daines, R-Mont.
In a letter to lawmakers on Thursday, Rettig emphasized that the resources in the package would bring the IRS back to historic standards in areas that challenge the agency. These include large corporations and high net worth taxpayers, as well as multinational taxpayers, where sophisticated, specialized teams are needed to unpack complex structures. He also said the check rates would not increase from past years for those with annual incomes less than $400,000.
“These resources are definitely not about increasing scrutiny of small businesses or middle-income Americans,” Rettig wrote.
The CBO projections indicate that the IRS measures represent about one-sixth of the revenue raised by the bill, and that revenue will go toward helping people buy private health insurance, boosting federal investment in renewable energies such as wind. – and solar, and paying off debt, among other things.
It’s unclear what aspects of Democratic tax proposals could change before the Senate completes work on the bill, but Wyden said he’s confident the spending increase for the IRS will remain in the final package.
“I can tell you that so far I have not objected in the Democratic caucus to this provision to bolster the IRS resources so that they can pursue wealthy tax fraud,” Wyden said.