With inflation at a forty-year high and the U.S. economy headed towards a recession, Democrats are now proposing to sic the IRS on households and small businesses to fund Democrats’ trillion-dollar tax and spending spree.
Senate Finance Committee Chairman Ron Wyden (D-Ore.) today called for increased IRS audits, investigations and enforcement to pay for Democrats’ reconciliation bill.
Wyden outlined additional funding for the IRS to increase enforcement at spending levels mirroring those in the House-passed version of Democrats’ reconciliation bill.
Under the House-passed bill, Democrats would shovel an additional $80 billion to the IRS to hire nearly 87,000 new IRS Agents. This beefed up IRS would then perform an additional 1.2 million annual IRS audits, about half of which will hit households making less than $75k.
Democrats also know that increasing the size of the IRS will fatten their campaign coffers. Most new IRS agents will join the IRS labor union, which gives 100% of its PAC funding to Democrats.
More Audits of Middle Class Households and Small Businesses
87,000 new IRS agents would be unleashed for invasive and time-consuming audits of middle class Americans and small businesses.
The IRS previously announced a goal to increase small business audits by 50%.
As noted by CNBC, experts say a fattened-up IRS would go after small businesses that necessarily depend on cash transactions:
Certain small businesses may face an audit under the plan. “I think the industries that should be concerned are those in cash,” said Luis Strohmeier, a Miami-based CFP and partner at Octavia Wealth Advisors.
He expects the agency to scrutinize cash-only small businesses like restaurants, retail, salons and other service-based companies.
Large corporations already have armies of lawyers and accountants that ensure they legally take advantage of the plethora of credits and deductions offered by the tax code.
Democrats will use the IRS to shake down small businesses that are less capable of fighting back. A standard audit is a stressful experience that can take two to three years. Law abiding taxpayers often give up rather than spend thousands of dollars getting assistance.
Small businesses already have enough to worry about due to the confusing 1099 paperwork burden imposed by the Democrats’ “American Rescue Plan.”
Spends 23x More on IRS Enforcement than Taxpayer Services
Out of the $80 billion in new IRS funding, $44.9 billion, more than half, will go directly towards enforcement. The agency will receive a comparatively meager $1.93 billion in funding for taxpayer services, which include things like pre-filing assistance and education, filing and account services, and taxpayer advocacy services.
Increased Potential for IRS Snooping
The Biden administration is still trying to snoop on your bank accounts and your Venmo and Paypal accounts.
Democrats want to give the IRS new power to automatically access bank account, Venmo, Paypal, and CashApp account inflows and outflows for all business and personal accounts with more than $600 in total deposits and withdrawals for what it describes as a “comprehensive financial account reporting regime.”
Blatant Disregard for Taxpayer Privacy, Regardless of Funding Level
Regardless of its funding level, the IRS has for decades proven unable and unwilling to safeguard private taxpayer data.
It has been 14 months since the revelation of a massive breach of private IRS taxpayer data, and still the IRS has not explained how someone gained top-to-bottom access to all Americans’ private files before stealing them and giving them to a progressive organization, ProPublica. The IRS and the Biden administration immediately vowed to investigate and prosecute. To this day, there are still no answers from the government.
A July 2022 audit by the Treasury Inspector General for Tax Administration found that the IRS hired many employees without even bothering to ensure they were eligible for federal employment. The report states:
“IRS hired individuals to fill positions the majority of which would have had access to taxpayer data yet never verified whether those individuals were eligible for Federal employment in the United States.”
This year TIGTA found the IRS failed to address 2,000 security vulnerabilities in the child tax credit portal.
A 2016 report from the Treasury Inspector General for Tax Administration concluded that the IRS lost track of 1,000 laptops containing sensitive taxpayer data that contract employees used. In 2015, hackers stole the personal data of 330,000 taxpayers using a tool on the IRS website to steal tax forms.
We should not increase the size and scope of the IRS when it refuses to hold itself accountable and protect taxpayer information.