Great Lakes Wire

The Inflation Reduction Act will provide the IRS with more agents in a move that critics say will open a pathway for more audits.

The Inflation Reduction Act of 2022 was passed by a Senate 51-50 vote in August. All 50 Democratic senators—including Sen. Gary Peters (D-MI)—voted for the bill, while none of the 50 Republican senators voted for it. Vice President Kamala Harris cast the deciding vote. The bill allocated $80 billion to the IRS, which critics say will go toward hiring 87,000 new IRS auditors.

Americans making less than $75,000 per year will receive the majority of IRS audits, a FOX Business report said.  An analysis found the IRS will add 1.2 million more audits on American tax returns. The IRS is expected to increase revenue by $124 billion. Responding to critics, IRS Commissioner Charles Rettig said audits would not increase with the passing of the Inflation Reduction Act.

“Make no mistake: American taxpayers of all income levels should brace for more audits, investigations and tax enforcement under the massive new IRS funding increase,” Sen. Mike Crapo (R-ID) said in an August tweet following the passage of the legislation. “Taxpayers deserve better services, not broken promises.”

The Washington Post’s Fact Checker noted that the 87,000 new hires "lacks significant context,” as it comes from a May 2021 Treasury report that indicated approximately $80 billion in funding would allow for the hire of 86,852 new employees over the next 10 years.

The Treasury report said the new employees would be added in groups of 7,000-12,000 every year, and “would conduct audits, improve informational technology and enhance customer service.”

The IRS has been historically underfunded, the Fact Checkers claim, leading to extended time to process tax returns and underdeveloped technology. Their assessment is that the IRS will grow 25-30% due to the Inflation Reduction Act, and they doubt Republicans' claim that it will double in size.

House Republicans released their “Commitment to America” agenda that outlines the top priorities if they win the House in the upcoming midterms.

The House Republicans tweeted, “The first thing we will do when we earn back the House this November is to repeal the 87,000 IRS agents Joe Biden and House Democrats’ hired.”

In an interview with The Center Square, Karen Kerrigan, president and CEO of the Small Business and Entrepreneurship Council, said, “There is no doubt that boosting IRS audit capabilities through a vast increase in the hiring of 87,000 new staff focused on this effort will hit small businesses the hardest. The tax data shows that it is small businesses of moderate means, not ‘the wealthy,’ that are targeted most frequently."

As of 2021, there were 902,131 small businesses, making up 99.6% of total Michigan businesses; the Small Business Administration (SBA) said. There are 1.9 million small-business employees, which make up 48.3% of Michigan employees.

The IRS targets households earning $25,000 per year or less five times more than others, a CBS News report said.

"It's unbelievable, the focus and targeting on the poorest families," Susan B. Long, co-director of TRAC and a professor of managerial statistics at Syracuse, said in the report. "It's five times the rate for everyone else — does this really make sense?"

The CBS report claimed audits are going down with a limited number of IRS employees; however, the report was published in March of this year, before the Inflation Reduction Act was passed.