Peach Tree Times

In a recent tweet, Sen. Mike Crapo (R-ID) commented on the Inflation Reduction Act’s $80 billion allocation for the capacity to hire 87,000 new IRS employees.

Crapo claims the new IRS audits will target Americans of “all income levels”; other critics say the new IRS funding will hit small businesses with more audits.

“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,” Crapo said in his tweet. “Taxpayers deserve better services, not broken promises.”

The Inflation Reduction Act of 2022 was passed in a 51-50 vote in August, allocating $80 billion dollars to the IRS. All 50 Democratic senators—including Sen. Raphael Warnock (D-GA)—voted for the bill to pass, while none of the 50 Republican senators voted for the bill. One tie-breaker vote from Vice President Kamala Harris helped to pass the legislation.

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, noting that 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.

The Washington Post’s Fact Checker said the number 87,000 "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 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, leading to extended time to process tax returns and underdeveloped technology; the Fact Checkers claim. While $46 billion is allocated for “enforcement,” Treasury Officials have yet to determine the exact number of IRS enforcement agents that will be hired. With over 50% of the current IRS employees eligible to retire in the next five years, the Fact Checkers predict the IRS will grow 25-30% due to the Inflation Reduction Act—contrary to Republicans’ claim that the agency will double in size.

Despite this, House Republicans released their “Commitment to America” agenda that outlines the top priorities if they win the House in the upcoming midterms, doubling down on their critiques of the recently passed act.

“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,” the House Republicans said in a recent tweet.

As of 2021, there were 1.1 million small businesses making up 99.6% of total Georgia businesses, the Small Business Administration (SBA) said. There were 1.7 million small business employees that made up 42.8% of all Georgia employees.

In an interview with The Center Square, Karen Kerrigan, president and CEO of the Small Business and Entrepreneurship Council, noted that she feared the move would impact small businesses the most. 

“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,” she said. “The tax data shows that it is small businesses of moderate means, not ‘the wealthy,’ that are targeted most frequently."

The IRS had 78,661 full-time employees, and with the assumed addition of 87,000 new IRS employees, the agency will have more than doubled—not taking into account potential retirements; the report said.

Kerrigan added that in fiscal year 2021, many small business owners did not have the resources to respond to an IRS audit by hiring accountants or lawyers, noting that small businesses also struggle to stay afloat with inflation and rising costs. 

“Dealing with crushing inflation and the economic downturn is unbearable enough for small business owners, without having this type of threat hanging over their heads,” she said.

The IRS targets households earning $25,000 per year or less five times more than others, a CBS News report said. The article claimed that audits are going down with the limited number of IRS employees, but the article was published in March of this year, before the Inflation Reduction Act was passed.