Treasury Secretary Janet Yellen Gives Specific Direction to IRS

Is somebody in the Biden Administration really thinking in the best interest of the middle-class family? It appears so.

Treasury Secretary Janet Yellen gave some direction to the Internal Revenue Service this week. She told them not to use any of the new funding allocated in the new health care and climate bill passed by the Democrats to increase the chances of Americans making less than $400,000 a year of getting audited. This information comes from a copy of the letter from Yellen obtained by CNN. 

Yellen’s letter was directed to IRS Commissioner Charles Rettig and it surfaced around attacks from the GOP over the $80 billion that is coming to the IRS from the Inflation Reduction Act. This money will be dispersed over the next 10 years and many Republicans believe it will result in more middle-class Americans and small businesses being audited. 

The Biden Administration has continually said that the IRS would focus on increased enforcement of tax laws on the high-wealth taxpayers and large corporations. They have said they will not target households that earn less than $400,000 a year.

Yellen wrote in the letter to Rettig, “Specifically, I direct that any additional resources—including any new personnel or auditors that are hired—shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels. This means that, contrary to the misinformation from opponents of this legislation, small business or households earning $400,000 per year or less will not see an increase in the chances that they are audited.”

Yellen went further saying that the increased resources should focus on “high-end noncompliance.”

The increased revenue given to the IRS in the Democrat’s Inflation Reduction Act legislation is projected to raise $124 billion in additional tax revenue over the next 10 years. This has become a major way for the Democrat’s plan to offset the cost of their effort to lower prescription drug costs and fight climate change.

IRS Not to Target Households Making Less Than $400,000 a Year

The House of Representatives, which is controlled by Democrats, still needs to approve the legislation before it gets presented to the desk of the president for his signature. The Senate passed the bill after months of intricate negotiations. They still had to use their filibuster-proof process to get it passed their narrow 50-seat majority. 

The total cost of the bill is $750 billion, and it was passed without any GOP votes. 

Rettig was appointed by former President Donald Trump to lead the IRS. He told lawmakers last week that low and middle-income taxpayers would not be the focus of increased enforcement action. 

He also said that the money would be focused on better technology and customer service. He believes that this will also make it less likely that compliant taxpayers would be audited.

The Democrats wrote within the bill itself that the new funding was not “intended to increase taxes on any taxpayer or small business with a taxable income below $400,000.”

But the Republicans are not buying it. They are opposing the new IRS funding and they are claiming that there will be increased audits on middle-class Americans. 

House Minority Leader Kevin McCarthy and Sen. Ted Cruz of Texas, along with the Republican National Committee, claim that the new funding will create 87,000 new IRS agents. The Treasury Department estimated in 2021 that an $80 billion investment in the IRS would allow the agency to hire 86,852 full-time employees over a decade. And Rettig told lawmakers that the IRS would need to hire 52,000 people over the next six years just to maintain the current staffing level to replace those who retire or leave the agency.

It’s hard to imagine that this kind of increase won’t affect the middle class.