Congressman Griffith's Weekly E-Newsletter 9.15.23
More Audits Coming from the IRS
Even the Internal Revenue Service (IRS) recognizes that more audits are coming. They admitted as much on September 8, 2023.
Since taking office more than two years ago, President Biden, his Administration, and Democrats in Congress have made it their mission to supercharge the IRS.
Last year, Democrats in Congress passed the so-called “Inflation Reduction Act” (IRA), which allocated $80 billion dollars in mandatory funding to the agency (the IRS previously requested this funding in conjunction with President Biden’s first budget proposal). More than half of that funding was specifically intended to hire 87,000 new IRS agents.
Republicans in Congress, including myself, as well as many Americans around the country, have raised concerns about this new funding and the hiring of so many new IRS agents, fearing that the agency will use these funds to target low- and middle-income families and small businesses.
Unlike wealthy people and big businesses, average American families and small businesses cannot afford lawyers to deal with an intrusive IRS. They likely file their taxes themselves and now the agency will have tens of thousands of new agents breathing down their necks.
When allocating the new money to the IRS, Democrats claimed that the agency would be targeting wealthy taxpayers and large corporations who they said are cheating on their taxes, and that families, people, and small businesses making under $400,000 wouldn’t see an increase in audits.
I, like many, have found this claim to be dubious.
When Treasury Secretary Janet Yellen was called before House Ways and Means Committee in March, she testified that, “IRA resources will not be used to increase the share of households and small businesses earning less than $400,000 that are audited, relative to historic levels.”
I’d like to note, while some small businesses may gross more than $400,000 a year, most of these mom-and-pop shops only take home a small fraction of their gross income.
Secretary Yellen certainly chose her words carefully that day.
If you listen closely, I believe you will hear that she gives the IRS two outs if they raise audit rates, by both saying the share won’t change relative to other groups being audited, and that it would be compared to historic levels which means rates can depend on certain years.
More recently, on September 8, the IRS put out a statement saying that they were putting in place additional “safeguards” to ensure taxpayers making less than $400,000 wouldn’t face more audits.
But why are new “safeguards” being put in place now if the agency does not expect to increase audits on average American families and small businesses?
Even more concerning, since the passage of the IRA, the IRS has not submitted to Congress a detailed plan on how they will use the $80 billion in new funding.
Instead, the agency has sent Congress a series of lackluster outlines of their activities, raising even more questions about how Americans’ tax dollars will be spent.
But wait, it gets worse! The IRS wants even more money.
The agency asked Congress for another $43 billion, of which $29.1 billion would be used to ‘continue IRA funded enforcement and compliance initiatives.’
What are these enforcement and compliance initiatives? We still don’t know.
And don’t forget about how Democrats changed the minimum threshold for reporting money transfers made on third-party settlement organizations to $600, essentially giving the IRS and Big Tech a mandate to scrutinize individuals, small business owners, and just about anyone who uses money transfer apps.
Payments made on apps like Venmo, PayPal, and Square between roommates or friends will be reviewable by the IRS next year.
This new requirement would also affect individuals hoping to unload their used goods or sell their handmade works on online platforms like eBay, Etsy, and Poshmark.
If you want to sell your used stereo equipment or sell a handmade quilt, why does the IRS need to know?
There should be a threshold, but $600 a year? I think not. (It’s currently $20,000.) I guess to Democrats if you “Venmo” more than $600 a year, you are either wealthy or a big business.
Republicans are committed to finding ways to prevent average Americans and businesses from being burdened by a behemoth IRS. Only the Sheriff of Nottingham could like this policy.
Unlike the villain in the Robin Hood legend, in January the first piece of legislation we passed with our new Republican majority was to rescind this new Democrat-driven $80 billion in funding for the IRS.
If you have questions, concerns, or comments, feel free to contact my office. You can call my Abingdon office at 276-525-1405, my Christiansburg office at 540-381-5671, or my Washington office at 202-225-3861. To reach my office via email, please visit my website at www.morgangriffith.house.gov.