The Internal Revenue Service (IRS) has announced it is launching a campaign to double the number of audits targeting wealthy individuals and large corporations.
This move comes as no surprise, given the government’s pressing need to bolster its coffers in the face of ballooning deficits and looming unfunded liabilities.
Under the new initiative, taxpayers with annual incomes exceeding $10 million can expect a significant uptick in scrutiny, with audit rates set to soar from 10% in 2019 to a staggering 16.5% by 2026.
Similarly, large corporations boasting assets over $250 million will see their audit rates nearly triple, while business partnerships with assets surpassing $10 million will experience a tenfold increase in audits.
IRS Commissioner Danny Werfel has been quick to reassure the public that this crackdown will not affect middle- and low-income taxpayers or small businesses. “As I’ve said over and over again, there is no new wave of audits coming for middle- and low-income \[taxpayers\], coming for mom-and-pops,” Werfel stated during a press conference. “That is not in our plans in any way, shape or form.”
IRS Warns Low- to Middle-Income Taxpayers Could Make Up Bulk of Tax Audits
The agency seeks more funds to accommodate its ever-increasing staffing requirements, with the bulk of current funding used for enforcement activities.https://t.co/llSVqKLEZ5
— The Epoch Times (@EpochTimes) May 6, 2024
Despite these assurances, the IRS’s track record tells a different story.
Historically, the agency has disproportionately targeted low-income Americans during its annual tax audits.
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This disparity stems from the complexities of high-income taxpayers’ investments, which can easily obscure discrepancies between taxes owed and paid versus those reported and paid.
The funding for this aggressive enforcement push was tucked into the Democrats’ health care and climate change spending bill, known as the Inflation Reduction Act, which President Biden signed into law in 2022.
Over the next decade, the IRS plans to allocate a staggering $57.82 billion to bolster its auditing capabilities, with $9.3 billion earmarked for fiscal 2025 alone.
As the nation’s fiscal challenges continue to mount, it is becoming increasingly clear that the IRS’s intensified focus on wealthy individuals and large corporations is just the beginning.
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Taxpayers across the board should brace themselves for a relentless squeeze as the government seeks to extract every last penny it can to keep its financial house in order.
