It has emerged as one of the top attack lines levied by Republicans against their Democratic opponents.
In campaign materials and TV ads, Republican candidates say that the Internal Revenue Service is hiring 87,000 enforcement agents to target middle-income earners.
Republican candidate Brandon Williams, who is running in the 22nd Congressional District, claimed in a TV ad that his opponent, Democrat Francis Conole, supports President Joe Biden's plan to "hire 87,000 IRS agents to target the middle class."
In the neighboring 24th Congressional District, Republican U.S. Rep. Claudia Tenney introduced legislation that would redirect funding from the IRS to the Border Patrol so it can hire more agents. Tenney said in a statement that Biden and the Democratic Party "are ignoring the problem (at the southern border) and instead giving tens of billions of dollars to the IRS, not to improve its services but so they can audit an additional 700,000 working-class Americans."
People are also reading…
The Inflation Reduction Act passed by the Democratic-led Congress and signed by Biden includes nearly $80 billion for the IRS over a 10-year period.
According to the bill's text, most of the funds — more than $45.6 billion — will boost the agency's enforcement activities. The remaining funding will be used for other purposes, including $25.3 billion for operations support, $4.7 billion to modernize business systems and $3.1 billion to provide taxpayer services.
The Congressional Budget Office analyzed the IRS funding included in the Inflation Reduction Act and estimates that the increased enforcement will raise $180 billion more in revenue over the next decade.
Because of concerns that increased IRS enforcement could result in more audits of low- or middle-income taxpayers, Treasury Secretary Janet Yellen issued a directive to the IRS stating 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."
Yellen continued, "This means that, contrary to the misinformation from opponents of this legislation, small businesses or households earning $400,000 per year or less will not see an increase in the chances that they are audited."
The CBO addressed a question from Republicans about how the new IRS funding will affect taxpayers earning less than $400,000. It projected that "an increase in revenues collected from taxpayers with income less than $400,000 (as reported both before and after any enforcement activities take place) will constitute a small fraction of the total increase collected from all taxpayers resulting from the increased funding for the IRS."
The office added the fraction "will be small because, CBO expects, the IRS will follow (Yellen's directive), and enforcement resources will focus on what the secretary terms high-end noncompliance."
In its letter to GOP members of Congress, the CBO acknowledges that "audit rates at historical amounts, in accordance with (Yellen's directive), will boost audit activity..."
When Republicans claim that the IRS will use the funding to hire 87,000 agents, they get one thing right: The number of employees.
A report released by the Treasury Department in 2021 shows how the IRS workforce would grow with a significant investment. There would be nearly 87,000 employees by the 2031 fiscal year.
Bill Smith, who is the national director of tax technical services at CBIZ MHM's National Tax Office, told CNBC that the number of IRS employees has decreased by 17% since 2010. The worker shortage has contributed to taxpayer service problems — there were about 8 million unprocessed returns and the agency answered 11% of its calls last year, he said.
While the funding would be used to beef up enforcement, it would also be used to fill other positions.
The Treasury Department's report makes a significant revelation — that the IRS "has fewer auditors than at any time since World War II."
This affects all filers — there was a 45.39% decrease in audit rates from 2010 to 2018 — but especially high-income earners and large corporations. According to the Treasury Department, audit rates for those earning more than $1 million decreased by 61.35% and by 63.76% for individuals earning over $10 million.
For corporations with $20 billion in assets, audit rates were down by nearly 50%.
The main reason for the lower audit rates: There were fewer employees. The agency's overall budget decreased by 18.5% and its enforcement budget declined by 15% between the 2010 and 2021 fiscal years, the Treasury Department said. During that period, the IRS workforce decreased by 20%.
Republicans are misleading voters about how the IRS funding will be used and who will be targeted by the enforcement actions.
The IRS will not hire 87,000 agents. While more auditors will be added, there are other positions to fill at the agency, including employees that provide taxpayer services.
The Treasury Department has directed the IRS to ensure that individuals earning less than $400,000 "are audited relative to historical levels." In its assessment, the Congressional Budget Office said revenues collected from taxpayers earning less than $400,000 "will constitute a small fraction of the total increase collected from all taxpayers resulting from the increased funding for the IRS."
While it's true that the IRS' auditing activity will increase, it will mainly target high-income earners and large corporations. Audit rates for those groups have been much lower in the last decade.
Politics reporter Robert Harding can be reached at (315) 282-2220 or firstname.lastname@example.org. Follow him on Twitter @robertharding.