By: Xiu Sun
The Inflation Reduction Act, a new bill which was approved by the Senate this Sunday, would allocate $80 billion to modernize the IRS and boost tax collection and enforcement.
Of the $80 billion, more than half goes to enforcement, four percent goes to taxpayer services, and the rest goes to business modernization and operation. Democrats anticipate that, with more resources for enforcement, the IRS can closely examine high-income individuals and corporations. The extra revenue is expected to lower the US deficit by $203 billion over the next decade.
The IRS has been severely underfunded for quite a long time largely due to GOP policy. Some IRS computers still run on the antiquated systems that no college computer science courses teach. It has severe staff shortages with staff number plummeting by 17 percent since 2010. Some experts think that even the new funding of $80 billion is not enough to assure the transformation of the agency.
Due to limited resources, The IRS has been dependent on the automated inexpensive audit system. Those types of audits mostly identify middle and low-income taxpayers who make mistakes on their returns or underpay their taxes by small amounts.
By hiring more employees and installing updated technology, the agency could significantly go beyond the revenue expectation by both chasing after more tax cheats and enhancing taxpayer services.
Republican lawmakers have criticized the legislation and claim that the upgraded IRS would use its new resources to go after middle-class and poor Americans.
Republicans argued that cracking down the higher-income taxpayers with dubious tax returns may not bring a large amount of money. The high-income earners often hire accountants and lawyers to fight the IRS’s enforcement mechanisms, or at least drag the process out over years. Even when the IRS finally could collect from the rich people, it would have consumed lots of resources in the process.
Source: https://s3.amazonaws.com/appforest_uf/f1659882475536x642376649871913200/Democrats%E2%80%99%20Inflation%20Reduction%20Act%20wager%20on%20the%20Internal%20Revenue%20Service%20-%20The%20Washington%20Post.pdf