The forthcoming overhaul of the Internal Revenue Service is intended to increase audits of the wealthy and big corporations while leaving audit rates on average households the same, according to a plan released by the agency Thursday.
The highly anticipated outline details how the IRS will spend a new $80 billion investment over the next decade.
The funding comes from Democrats’ sweeping Inflation Reduction Act, which passed along party lines last year and is meant to support the agency in cracking down on tax cheats and providing better service to taxpayers.
As a result of the improvements, the IRS is expected to collect more than $100 billion in new revenue over a 10-year period.
But Republicans have been critical of sending so much money to the IRS and skeptical that the investment won’t lead to increased audits of hardworking Americans. In the GOP-controlled House, a bill passed earlier this year that would rescind most of the new funding – though it has no chance of becoming law.
Biden administration officials have repeatedly said that taxpayers earning less than $400,000 a year won’t face an increase in taxes due to the new funding, though there is some uncertainty about how exactly the IRS can ensure this.
The IRS’ new commissioner, Danny Werfel, addressed the issue on a call with reporters Thursday. The focus of new audits, he said, will first be on wealthy individuals, large corporations and complex partnerships.
“We have years ahead of us where we will be 100% focused on building capacity for higher income individuals and corporations. During this time, the audit rates of average taxpayers will not increase,” Werfel said.