Janet Yellen, who is the US Treasure Secretary, has given the IRS a 6-month deadline to put in place a comprehensive spending plan. This was revealed in an internal treasure memo.
Yellen’s memo to the IRS commissioner Charles Rettig was obtained by Reuters and stated that the spending plan should include “should include details on how resources will be spent over the ten-year horizon on technology, service improvement, and personnel.”
“This operational plan is key to ensuring the public and Congress are able to hold the agency accountable as it pursues needed improvements,” Yellen wrote. She also said the plan should quantitative data for future spending.
The $80 billion in additional resources for the IRS, including up-to 87,000 new agents is a crucial part of President Joe Biden’s $430 billion tax, climate and prescription drugs law signed on Tuesday. The financial support to the IRS is in place to recoup taxes from higher earners.
The Congressional Budget Office has estimated that the additional $80 billion being given to the IRS would bring $204 billion in tax revenues a period of 10 years with enhanced tax compliance.
The earlier version of Biden’s bill would have required a 6-month spending plan to be in place for additional funding to be approved, this measure however, was removed.
Yellen re-iterated last week that the further investments in the IRS must not result in a spike in audits for those earning less than $400,000 or for small businesses, compared to “historical levels.”
It is unknown just now which historical audit rates Yellen is targeting. The Tax Policy Center in Washington, which is a think tank run by the Brookings Institution and the Urban Institute, believes that 10 years of budget cuts reduced overall audit rates in 2019 to 0.4% of individual tax returns from 1.1% in 2010 and the restrictions introduced as a result of COVID slashed those rates even further.
ARTICLE: PAUL MURDOCH
MANAGING EDITOR: CARSON CHOATE
PHOTO CREDITS: FOX BUSINESS
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