Yellen instructs IRS to develop plan for $80 billion overhaul within 6 months – Fox Business | Vette Leader

Treasury Secretary Janet Yellen on Wednesday called on the Internal Revenue Service to develop an operational plan for deploying the $80 billion in new funding allocated to it under the Democrats’ health and climate spending package.

In a memo to IRS Commissioner Chuck Rettig, Yellen said the inflow of funds over the next decade is a “significant operational challenge” that will ultimately provide a “monumental opportunity” to transform the tax collection agency.

Yellen outlined in the memo — of which FOX Business obtained a copy — her top priorities, including cleaning up a backlog of unprocessed tax returns, modernizing IRS technology, improving taxpayer services and hiring “at least” 50,000 new ones employees over the next five years.

“The work will require an all-hands-on-deck approach from the dedicated staff of the IRS,” she wrote.

Yellen instructed the agency to draft an operational plan within six months, detailing how the money will be spent over the next ten years, with specific operational initiatives and associated timelines.

STRATEGIES AND TAX EXPERTS WEIGH THE IMPACT OF MANCHIN-SUPPORTED LAW ON MIDDLE ELECTIONS

President Biden smiles after signing into law HR 5376, the Inflation Mitigation Act of 2022, Tuesday, August 16, 2022, in the State Dining Room of the White House. (Demetrius Freeman/The Washington Post via Getty Images/Getty Images)

Providing the IRS with an influx of funding has been a top priority for Democrats and has become one of the most prominent financiers of the Inflation Reduction Act President Biden signed the law this week. But it has drawn fierce opposition from Republicans, who say a beefed-up IRS could ultimately hurt lower-income Americans.

That’s because the IRS disproportionately targets low-income Americans in its annual tax audits. According to a recent study, households earning less than $25,000 are five times more likely to be audited by the agency than anyone else Analysis of tax data beginning in fiscal year 2021 through Syracuse University’s Transactional Records Access Clearinghouse (TRAC).

This is due to an increase in so-called “correspondence checks,” meaning the IRS checks tax returns by letter or phone call, rather than conducting more complex in-person checks. Only a fraction – 100,000 of the 659,000 audits in 2021 – were conducted in person.

According to the Syracuse study, more than half of the correspondence checks initiated by the IRS last year — 54% — involved low-income workers with gross earnings of less than $25,000 claiming the earned income tax credit, an anti-poverty measure.

The discrepancy is primarily due to the fact that high-income taxpayers make complex investments that can easily obscure the gaps between taxes owed and paid and taxes reported and paid.

Yellen has denied that fear, reiterating in her memo that she instructed the IRS not to increase screening of households with annual incomes of less than $400,000.

“These investments will not result in households earning $400,000 or less per year or in small businesses seeing an increase in the odds of being audited compared to historical levels,” Yellen wrote. “Instead, they will allow the IRS to work to end the two-tier tax system where most Americans pay what they owe, but those at the top of the distribution often don’t.”

Janet Yellen

Treasury Secretary Janet Yellen testifies before the House Ways and Means Committee on Capitol Hill in Washington on June 8, 2022. (AP Photo/Jose Luis Magana, File/AP Newsroom)

The spending bill is expected to raise an estimated $739 billion over the next decade by increasing IRS funding, introducing a 15% minimum corporate income tax targeting corporate book earnings, allowing Medicare to Negotiate the cost of prescription drugs and impose a 1% excise tax on company stock buybacks.

CLICK HERE TO READ MORE ABOUT FOX BUSINESS

Proceeds from the policies go to initiatives that support them fight climate change and curbing drug prices and efforts to reduce the country’s $30 trillion in debt. That includes about $433 billion in new spending, while about $300 billion of the new revenue would go towards filling the country’s deficit.

Leave a Comment