WASHINGTON (AP) – After more than a decade of mostly losses, the Internal Revenue Service could finally get the cash infusion it has long wanted in its economic package Democrats are pushing hard to pass Congress before their August break.
Under the agreement reached by Senate Majority Leader Chuck Schumer and Senator Joe Manchin of West Virginia, the bill would cost struggling agencies an additional $79.6 billion over the next 10 years. The Congressional Budget Office expects the program to generate an additional $203.7 billion in revenue for the federal government over that time, with a net benefit of more than $124 billion.
As the Senate prepares to begin voting on the bill in the coming days, the IRS proposal has become a magnet for Republican attacks, testing the unity of Democrats as they try to achieve key climate and health care priorities ahead of the fall midterm elections.
Democrats say the IRS investment is necessary to ensure companies and wealthier Americans pay the taxes they owe. But Republicans warned it would lead to greater scrutiny of small business owners and others who are overburdened.
For the past dozen years, the IRS has been in a losing battle for congressional funding. In April, IRS Commissioner Charles Rettig told members of the Senate Finance Committee that the agency’s budget had fallen by more than 15% over the past decade, accounting for inflation, compared with a full-time rate last fiscal year. The number of employees is close to 79,000. to 1974 levels.
While filings have risen, law enforcement officers have been hit harder, down about 30 percent since 2010.
“In recent years, every measure critical to effective tax administration has suffered enormous losses, with insufficient investment in human capital and information technology leading to serious deficiencies,” Rettig said.
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, whether they serve a Republican or Democratic administration.
“They begged us to give the IRS some resources so they could do their job,” Carper said.
Democrats see an opportunity to change that. More than half of their proposed increase in spending would go to law enforcement. The next largest portion, $25.3 billion, will go to operational support such as rent, security and postage. Another $4.75 billion will be used to improve call-back services and other technologies aimed at improving customer service. $3.2 billion will go to pre-application and educational aid.
Ron Wyden, chairman of the Oregon Senate Finance Committee, called the investment “an important tool to ensure we have sound tax policy.”
“This will give us the opportunity to generate revenue from wealthy tax evaders who are evading what they owe,” Wyden said.
Republican lawmakers condemned the plan and described the larger IRS as a means of harassing voters.
“In a time of inflation, Democrats also want to spend $80 billion to roughly double the size of the IRS, so they can take more money from the American people through harassment and auditing, and use taxpayer money to make Taxpayers’ lives have gotten worse,” Senate Republican Leader Mitch McConnell said on the Senate floor on Thursday.
“I think it’s scary to them that they want to weaponize the IRS, expand it to go after families, farmers and small businesses and try to raise more money,” Senator John Barrasso ( John Barrasso) said. – Wyo. “It’s basically a rectification operation.”
A particular complaint is that the Democrats’ proposal should dedicate more resources to customer service rather than focusing on enforcement.Pandemic The IRS was forced to temporarily close its processing facilities for health and safety reasons.This has resulted in unprecedented delays And the challenge that the IRS is still trying to catch up with.
“First and foremost, good, honest taxpayers who just want basic assistance from the IRS,” said Sen. Steve Daines, R-Mont.
In a letter to lawmakers on Thursday, Rettig emphasized that the resources in the package will bring the IRS back to historical norms in areas that challenge the agency. These include large corporations and high net worth taxpayers, as well as multinational taxpayers, who need a team of sophisticated professionals to unravel complex structures. He also said that for those earning less than $400,000 a year, the audit rate will not rise relative to recent years.
“These resources are in no way intended to enhance audit scrutiny of small businesses or middle-income Americans,” Rettig wrote.
CBO projections suggest that the IRS measures account for about one-sixth of the revenue the bill would raise to help people buy private health insurance, boost federal investment in renewables like wind and solar, and repay debt, etc. Other things.
It’s unclear what aspects of the Democrats’ tax proposal could change until the Senate completes work on the bill, but Wyden said he believes the increase in IRS spending will remain in the final package.
“I can tell you that so far, I’ve had no objection in the Democratic caucus for strengthening IRS resources so they can go after wealthy tax evaders,” Wyden said.