President Joe Biden’s Inflation Reduction Act earmarked billions for the IRS over the next decade to hire 87,000 new workers and go after the ultra-rich to pay their fair share. So, how’s that working out?
So far, not so good. Syracuse University’s Transactional Records Access Clearinghouse (TRAC) released new data on Wednesday showing the exact opposite is taking place. The IRS’s order of business continued to be targeting those with the least ability to defend themselves.
A review of audits conducted during the fiscal year 2022 showed that the agency still prefers low-hanging fruit. As has historically been the case, those facing audits remain primarily low-income taxpayers.
In fact, TRAC reported that low earners who claim the earned income tax credit are five-and-a-half times more likely to face IRS scrutiny than virtually everyone else.
IRS Overwhelmingly Targeting Low-Income Taxpayers for Audit. This is not surprising, as direct cash payments to low-income taxpayers is area rife with fraud. "Targeting" the rich to get back a lot of cash is a left talking point unconnected to reality. https://t.co/D7I4HOoA6c
— Tom Fitton (@TomFitton) January 8, 2023
So much for the White House’s and Democratic Party’s pledge to use the draconian agency’s vast resources to probe top earners.
The study proved that a dramatic increase in federal income tax audits aimed at the lower end of the wage scale propped up the total number of IRS audits. Breaking down the numbers further proves what critics charge.
There were just over 160 million income tax returns filed for fiscal year 2021. Out of these, 659,003 filers were audited. This was accomplished by increasing the number of “correspondence audits” conducted by the agency.
That is a letter from the IRS requesting documentation for a specific line item on a return. In fact, only 100,000 of the total audits were conducted through traditional investigative means, and correspondence accounted for 85% of all IRS tax audits.
This is where the numbers get interesting.
Over half of these correspondence audits were conducted on the small percentage of filers who earn so little that they qualify for the earned income tax credit. In other words, 54% of these audits targeted those with gross receipts of under $25,000 who claimed the benefit.
On the other end of the scale, earners bringing in from $200,000 to $1 million were only audited a third of the frequency as the poorest Americans. The rate for these almost 9 million taxpayers was only 4.5 out of every 1,000 returns.
That compared to 13.0 out of 1,000 returns for the lowest earners.
This also came at a time when IRS customer service is known to be its worst in decades. Getting assistance over the telephone in many instances was next to impossible.
Clearly, Biden’s tax system has a drastic distance to cover before it even comes close to being what he promised and taxpayers paid for. Singling out the lowest earners for extra scrutiny makes a mockery of the fairness the IRS says it strives for.
