Who the IRS Will Audit With Its $80B Budget Boost
The bottom line, Bush opines, “is time will tell. This is an easily measurable statistic with two data points (tax years 2022 and 2023) between now and the 2024 election. If the promise is broken, the Republicans will be able to make it a legitimate campaign issue.”
Army of Agents
Shai Akabas, director of economic policy at the Bipartisan Policy Center, told ThinkAdvisor Thursday in an email that IRS audit rates “have fallen precipitously in recent years, so adding staff to that portion of the agency is overdue. The vast majority of this additional enforcement activity is likely to be targeted at high-income individuals and businesses, which is where an outsized portion of tax revenue comes from.”
Akabas added that “it’s hard to believe that not a dollar of that new activity will reach lower- or middle-income individuals, but I certainly wouldn’t expect an army of new IRS agents going after the middle class.”
More Than Just Audits
Both Bush and Akabas agree that the IRS has a high attrition rate.
The agency’s “demographics are worse than the U.S. and China, with 50% of their most senior workforce eligible to retire in the next five years,” Bush said. “Most of the 87,000 anticipated new hires will replace those retiring employees across the organization.”
Many of the new hires “will be auditors, focused on significantly increasing the number of audits on higher-income individuals and corporations,” Bush added. The new agents “will also be armed with new technology, including AI, to scour returns looking for red flags and patterns to guide their efforts.”
The IRS “has been severely underfunded and understaffed for years, leading to serious customer service shortfalls, extensive delays in processing, and insufficient enforcement activities to close a wide tax gap — the difference between what is owed and what is paid in taxes,” BPC’s Akabas said.
The new funding “will help address all these issues,” Akabas added. “Many of the hires will replace retiring or departing personnel, and far from all of them will be focused on enforcement activities, such as audits.”
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