Extra Power for the IRS No Longer Part of Infrastructure Deal

By:
Chris Gaetano
Published Date:
Jul 19, 2021

IRS

Republican lawmakers have successfully removed a key provision from the bipartisan infrastructure deal that would have put billions of dollars toward strengthening the IRS, the Wall Street Journal reported. The measure was meant to boost the IRS's ability to collect legally owed revenue, a function that has been in a long state of atrophy over the past decade. Since 2012, the number of audits of individuals with incomes of a million dollars or more has dropped by 72 percent, going from 40,965 audits to 11,331 in 2020. Considering that below 1 percent of all income tax returns are audited in general, the number of audits of millionaires is likely even lower.

Republicans had heavily objected to this measure, fearful that a newly empowered IRS might be weaponized for political means, and they threatened to tank the entire infrastructure bill if this provision were not taken out. But removing the provision has raised questions as to how the lawmakers will now replace the hundreds of billions of dollars in revenue that some believed would come from stepped-up enforcement. This will be especially difficult, given the White House's intention that the package not raise the federal deficit.

While the enhanced IRS enforcement provision is out of the infrastructure bill, the Journal said that it might reappear in a separate spending package sometime in the future. Further, another enforcement proposal, which would require banks to send information about inflows and outflows from accounts to catch tax cheats, remains in play, as it is currently under discussion in the budget negotiations.

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