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Congress Member Seeks Details of IRS Plans with Funding from Inflation Reduction Act

By:
Ruth Singleton
Published Date:
Aug 19, 2022

Rep. Bill Pascrell (D-N.J.), chairman of the House Ways and Means Oversight Subcommittee, sent a letter to IRS Commissioner Charles Rettig, asking him to provide specifics about what the IRS plans to do with the funding provided by the Inflation Reduction Act to enforce national tax laws.  

Pascrell, began by praising the new law. “I am thrilled that Congress has passed, and the President has signed, the Inflation Reduction Act of 2022 (IRA) into law,” he wrote. “The IRA will provide much-needed and well-overdue funding for the Internal Revenue Service (IRS) to improve operations and crack down on rich tax cheats. As you know, I have made fairness and equity in our federal tax system a top priority. The failure to fund and prioritize robust tax enforcement has allowed wealthy individuals and large corporations to avoid paying their fair share.” 

Pascrell went on to discuss why he believes the new funding is needed, writing, “Inadequate resources and decades of neglect have badly harmed public confidence in the IRS.” Among the examples of poor service he cited were the following:

• 90 percent of taxpayers seeking telephone assistance from the IRS do not reach an assistor;• the IRS is taking an average of 251 days to process taxpayer correspondence, more than triple the 2019 processing time of 74 days;• approximately 14 million individual and business returns are waiting to be processed (160,000 of which were received in 2021);• the tax gap (taxes owed but not paid) is over $600 billion a year, according to the Department of the Treasury; and• the IRS is relying on antiquated information systems, many of which are over 25 years old. 
Pascrell also expressed concern about widespread misinformation about the funding, saying,  “During consideration of the IRA, statements were made that misrepresented how the IRS planned to use its additional enforcement funding. Any baseless fearmongering does a great disservice to the hardworking men and women at the IRS, including law enforcement personnel.”

While Pascrell did not mention the source of the “baseless fearmonger” he described, Accounting Today reported on a number of instances when Republican members of Congress said that the bill was intended to increase audit rates for the middle class or small businesses. For example, Tom Rep. Emmer (R-Minn.), chairman of the National Republican Congressional Committee, has said that President Biden was "building an army of IRS agents to harass and bully the middle class.” Sen. Chuck Grassley (R-Iowa) has said, "Are they going to have a strike force that goes in with AK-15s already loaded, ready to shoot some small-business person in Iowa?"

Accounting Today noted that such claims—including that the funds would be used to hire 87,000 IRS agents to target the middle class and small businesses—have been debunked by Treasury Department Secretary Janet L. Yellen in an Aug. 10 letter to Rettig. In that letter, Yellen said, "Specifically, I direct that any additional resources—including any new personnel or auditors that are hired—shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels. This means that, contrary to the misinformation from opponents of this legislation, small business or households earning $400,000 per year or less will not see an increase in the chances that they are audited."

Pascrell closed by requesting that the IRS “provide a breakdown of its plan to use the additional funding by year and by activity. I request this response by August 30, 2022, so that the Congress may be assured that the resources in this bill are being directed toward restoring fairness, equity, and taxpayer services.”

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