August 25, 2022

CBO Confirms Inflation Act Unleashes IRS Audits and Enforcement on Families Making Less Than $400,000

A new report from the Congressional Budget Office (CBO) confirms that Democrats’ Inflation Act, which supercharges the IRS with 87,000 new agents, will lead to more audits and enforcement measures, and higher taxes for families making less than $400,000. The analysis comes in a response to House Budget Committee Republican Leader Jason Smith (MO-08) and House Ways and Means Committee Republican Leader Kevin Brady (TX-08).
act hurts lower income
CBO’s analysis finds that revenues will be collected from American families with incomes of less than $400,000. CBO also confirmed that Secretary Yellen’s directive to IRS Commissioner Rettig fails to prohibit an increase on enforcement activities, including automated screening and document matching. Should audits return to “historical levels,” as per Secretary Yellen’s directive, lower- and middle-income earners could face an increase of 710,000 additional audits. CBO confirmed Democrats’ Inflation Act would increase the IRS budget beyond its previous historical high in 2010, when the agency was found to have targeted conservative groups. description img "This is yet more evidence that the Inflation Act is a bad deal for the American people and will lead to more IRS audits and bury families under mountains of paperwork. In fact, Americans making less than $200,000 are 80 percent more likely to be targeted by the IRS under Secretary Yellen’s historic audit levels. Additionally, the Secretary’s directive does nothing to constrain other enforcement activities performed by the IRS, which will increase for all taxpayers, including those making less than $400,000” said House Budget Committee Republican Leader Jason Smith (MO-08). “President Biden and Washington Democrats have unleashed the IRS to hire an army of 87,000 agents to search under the couch cushions of every living room in America for more money, to audit and harass families just trying to get by. Democrats love to say that America needs a bigger IRS so the wealthy and corporations pay their ‘fair share’ while they push policies that ensure small businesses and the middle class are on the hook, including billions in new taxes that will be taken from Americans earning less than $400,000. When tax season rolls around next spring, more Americans will live with the fear that an honest mistake could mean a knock at the door from the IRS." Ways and Means Republican Leader Kevin Brady (R-TX-08) said: “The independent Congressional Budget Office soundly debunks the White House claim that there are ‘no new IRS agents’ and ‘no additional audits.’ CBO confirms that lower and middle income taxpayers will see more audits, which we find could be as many as 710,000 more. This is common sense: Thousands of new IRS agents means thousands more audits.” Key Takeaways from CBO Response
  • CBO’s latest analysis shows that increased revenues from a supercharged IRS will “be collected from taxpayers with income less than $400,000.”
  • CBO admits that even under new direction from the Treasury Secretary, audits will return to historical amounts – a period of time in which audits on lower- and middle-income earners were higher.
  • Lastly, CBO’s analysis finds that IRS’s budget will nearly double in the long term, contrary to Biden official claims.
The Inflation Act Supercharges the IRS
  • $80 billion funneled to the IRS
  • Over 50 percent of funds go towards enforcement purposes, but only 4 percent is allotted for taxpayer services
  • IRS already struggles to provide basic customer services to taxpayers – only answering 20 percent of the phone calls it receives
Click here to view the House Budget Committee Republican Fact Sheet on the Democrats’ Inflation Act.