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I.R.S. Says Funding Won’t Mean More Audits for Middle-Income Americans

WASHINGTON — Internal Revenue Service commissioner Charles P. Rettig told Congress Thursday that the tax collection agency would not increase controls on households earning less than $400,000 if given the additional $80 billion lawmakers are considering in a proposed climate. and tax legislative package.

Providing more funding for the IRS has been a top priority of the Biden administration and has emerged as the primary way to fund some of the policies Democrats are proposing without raising individual tax rates. The additional funding is expected to go toward hiring more enforcement agents to deal with wealthy tax evaders and corporations and to modernize the agency’s outdated technology.

“These resources are definitely not about increasing scrutiny of small businesses or middle-income Americans,” Mr Retting wrote in a letter to lawmakers. “As we planned, our investment of these enforcement assets is designed around the Treasury’s guideline that audit rates will not increase over the past few years for households earning less than $400,000.”

That commitment is consistent with President Biden’s pledge not to tax middle-income Americans.

Mr Rettig added that better technology and customer service at the IRS would mean that honest taxpayers are less likely to be audited.

IRS funding is expected to increase $124 billion more than ten years of additional tax revenue. Treasury officials believe this estimate is too conservative and that an agency with more robust audit capabilities will deter tax fraud.

Democrats are expected to consider the additional funding as part of a new package called the Inflation Reduction Act, which includes raising taxes on corporations and lowering the cost of prescription drugs. The overall package has met stiff opposition from Republicans and would need every Senate Democrat to back it up to succeed.

One of the provisions Republicans oppose is the IRS funding. Republicans have a long history of trying to starve the IRS of money and have complained for years that it is being used as a political weapon and unfairly targeting conservative groups.

According to the Inspector General of the IRS, the agency’s investigation has crossed party lines. But it came under fire again last month after The New York Times reported that James B. Comey, the former FBI director, and his deputy, Andrew G. McCabe — both alleged enemies of former President Donald J. Trump — made rare, underwent exhaustive audits during the Trump administration. The IRS said Mr Rettig was not involved in the audits.

In attacking the proposed legislation this week, the Republican National Committee claimed that an “army” of 87,000 IRS agents would “disproportionately attack poorer Americans.”

Mr Rettig, whose term ends later this year, insisted those suggestions were unfounded on Thursday.

“Big corporations and high net worth taxpayers often enlist teams of sophisticated representatives who pursue uncertain or sometimes questionable interpretations of tax law,” he said. “The integrity and fairness of our tax administration system depends on our agency’s ability to maintain a strong, visible and robust enforcement presence targeting these and other similarly non-compliant taxpayers.”

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