Three False Narratives Being Used in the IRS Funding Push

The single most important thing Congress can do to have a positive effect on compliance is to radically simplify the tax code.

President Biden recently submitted his discretionary-spending request for fiscal year 2022 to Congress. Unsurprisingly, the president is seeking more money for the Internal Revenue Service: Under the plan, the agency’s budget would grow by $1.2 billion (a 10.4 percent increase from the 2021 appropriation). Almost 65 percent of the new money is directed squarely at enforcement. According to a statement from Treasury secretary Janet Yellen, the budget “will increase resources for tax enforcement by $0.9 billion.”

Specifically, the IRS wants to hire more auditors and tax collectors — including highly specialized auditors — to focus on high-income earners, corporations, and offshore transactions. The primary goal is to close the alleged “tax gap” attributable to the top 1 percent of income earners, which is claimed to be substantially higher than previously believed.

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