The Sconi

U.S. Sen. Mike Crapo (R-ID) is warning there will be no escape from the 87,000 new IRS employees that are set to join the government as part of the $80 billion Inflation Reduction Act.

In an Aug. 29 tweet, Crapo said, “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. Taxpayers deserve better services, not broken promises.”

Critics of the IRS funding portion of the legislation also worry it will hit small businesses with more audits.

In a 51-50 vote, the Inflation Reduction Act of 2022 was passed back in August, with all 50 Democratic senators supporting the measure and Vice President Kamala Harris breaking a 50-50 tie after no Republican senators voted in favor of it. In an interview with MSNBC, Mandela Barnes, a Democratic candidate running for Senate in Wisconsin, said he supported the measure.

With Fox Business reporting the IRS is expected to increase revenue by up to $124 billion with the bill’s enactment, the network adds Americans making less than $75,000 per year will receive the majority of IRS audits. Further analysis details that the IRS will add 1.2 million more audits on American tax returns.

As criticism of the measure has mounted, IRS Commissioner Charles Rettig argues audits would not increase with the passage of the Inflation Reduction Act. According to the Washington Post’s Fact Checker, the number 87,000 "lacks significant context," as it comes from a May 2021 Treasury report that indicates 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,” according to the Washington Post.

The Post reports after historically being underfunded, the IRS will grow by up to 30% due to the Inflation Reduction Act, with $46 billion allocated for “enforcement.” With over 50% of current IRS employees eligible to retire in the next five years, Fact Checkers also question Republican claims that the agency stands to double in size.  

As a counter to many of the Biden administration actions, House Republicans recently released their “Commitment to America” agenda that outlines the top priorities if they win the House in the upcoming midterms.

In a recent tweet, House Republicans vowed last month, “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 a recent The Center Square interview, Small Business and Entrepreneurship Council President and CEO Karen Kerrigan left little doubt about how she thinks the changes will impact her industry.

“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."

With The Center Square highlighting that in fiscal year 2021, the IRS had 78,661 full-time employees and that the addition of 87,000 new hires will more than double its manpower, Kerrigan adds that many small business owners do not have the resources to respond to an IRS audit by hiring accountants or lawyers. 

With small businesses everywhere already struggling to stay afloat in the face of growing inflation and rising costs, Kerrigan said, “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.”

Here in Wisconsin, CDN.Advocacy reports as of 2021, the Small Business Administration (SBA) notes there were 461,525 small businesses making up 99.4% of state businesses. At the same time, there were 1.3 million small business employees, accounting for almost half (49%) of state employees.

As it is, CBS News reports the IRS already targets households earning $25,000 or less per year five times more than others.

"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. "It's five times the rate for everyone else — does this really make sense?"