Expanding the IRS

MYRNA BROWN, HOST: It’s Thursday the 25th of August, 2022.

Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Myrna Brown.

PAUL BUTLER, HOST: And I’m Paul Butler. First up on The World and Everything in It: concerns over the IRS.

The “Inflation Reduction Act” signed by the President last week authorizes a significant spending increase for the Internal Revenue Service. Critics warn that the IRS will use that money to hire agents who will target the middle class with audits and seizures.

BROWN: Joining us now from Washington is WORLD reporter Leo Briceno. Good morning!

LEO BRICENO, REPORTER: Good morning! Thanks for having me.

BROWN: Leo, you looked into the claims that the IRS might be making some new hires with the funding they’re slotted to receive. Can you fill us in on what that might look like?

BRICENO: Sure—yeah, there have been a lot of concerns, especially from fiscal conservatives, that the IRS might be adding as many as 87,000 new employees with the funding made possible through the Inflation Reduction Act. They’ve received almost 80-billion dollars over a 10 year period, ending in 2031. With that kind of funding, the IRS could double their current workforce. And that is something that conservative lawmakers have been very wary of. That number, 87,000, has become a key talking point for opponents of the Inflation Reduction Act. Here’s South Dakota Sen. John Thune during the floor debate on the bill:

THUNE: Madam President, $80 billion to the IRS for an additional 87,000 employes. 87,000 employees. You’re going to have tax agents moving in with families around this country.

BROWN: That is a pretty big number, so has the IRS said that it wants to hire 87,000 employees?

BRICENO: No, not explicitly. That number is a little bit more of an estimate than it is a concrete plan of what the IRS hopes to do. In a 2021 Report, the IRS outlined what kind of updates it needed in terms of technology, workforce, and resources in order to stay competitive with developing methods of tax evasion—and they extrapolated that estimation a decade into the future. The report said that if Congress were to give the IRS $80 billion, they could use that money to hire up to 87,000 in a decade. So that figure is a projection of how many employees the IRS might need in 2031, based on how the IRS operates now. That doesn’t mean that they’re tied to hiring that many people.

But you can understand the concern, the IRS got exactly what they were asking for, so now observers can’t help but think, ‘well…now they have the funding…they’re probably going to do exactly what they said they were going to do.’

BROWN: Ok, I see. So what would these new employees be doing?

BRICENO: For now, filling the holes the IRS needs filled. But in the long run, the IRS hopes that by the end of a decade, that extra manpower can help bring in as much as $200 billion in lawfully-owned tax revenue. The IRS says a lot of taxable money is slipping through their fingers right now, but if they up their scrutiny, they can help bolster the government’s funding. Right now, they’re hoping to find that amount by increasing the number of audits on Americans making more than $400,000 annually, which is kind of problematic.

BROWN: Why is that a problem?

BRICENO: Well, you’ve got to wonder. Are there enough Americans to audit making $400,000 such that you could collect $200 billion over a decade? Things may change in 10 years, but as it stands right now, not everyone is so sure. I spoke with Rachel Greszler, a senior research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget. She says that number is a bit of a longshot if the IRS intends to only increase audits for people making $400,000 or more.

GRESZLER: Well, just the total amount of new money that they were projecting would come in from these audits is very large. And then thinking through, well, is there actually even that much money at the top and that much being avoided—whether it’s intentional or inadvertent? Yeah, I just don’t see them being able to generate $204 billion in new revenues from enforcement if they’re only going to be using that new funding to go after people that are making more than $400,000. The money just does not seem to be there, and that’s based on their own reports about how much comes in from additional audits.

BROWN: What will the IRS do if it can’t meet the numbers it says it can find?

BRICENO: That’s a good question. I don’t know that there’s a concrete answer to that just yet. But if they miss their projections, the Federal government will have less funds to work with or the IRS will have to find more people to audits and new loopholes to close.

BROWN: Leo Briceno, thanks so much.

BRICENO: Thanks for having me!

BROWN: To read more of Leo’s coverage of this story, we’ve included a link in today’s transcript. And if you’d like to receive our free newsletter on politics and government each Thursday look for The Stew at wng.org/newsletters.

MYRNA BROWN, HOST: It’s Thursday the 25th of August, 2022.

Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Myrna Brown.

PAUL BUTLER, HOST: And I’m Paul Butler. First up on The World and Everything in It: concerns over the IRS.

The “Inflation Reduction Act” signed by the President last week authorizes a significant spending increase for the Internal Revenue Service. Critics warn that the IRS will use that money to hire agents who will target the middle class with audits and seizures.

BROWN: Joining us now from Washington is WORLD reporter Leo Briceno. Good morning!

LEO BRICENO, REPORTER: Good morning! Thanks for having me.

BROWN: Leo, you looked into the claims that the IRS might be making some new hires with the funding they’re slotted to receive. Can you fill us in on what that might look like?

BRICENO: Sure—yeah, there have been a lot of concerns, especially from fiscal conservatives, that the IRS might be adding as many as 87,000 new employees with the funding made possible through the Inflation Reduction Act. They’ve received almost 80-billion dollars over a 10 year period, ending in 2031. With that kind of funding, the IRS could double their current workforce. And that is something that conservative lawmakers have been very wary of. That number, 87,000, has become a key talking point for opponents of the Inflation Reduction Act. Here’s South Dakota Sen. John Thune during the floor debate on the bill:

THUNE: Madam President, $80 billion to the IRS for an additional 87,000 employes. 87,000 new employees at an agency that I’m told only has about 53 percent of its workforce actually going back to the office. 87,000 employees. You’re going to have tax agents moving in with families around this country.

BROWN: That is a pretty big number, so has the IRS said that it wants to hire 87,000 employees?

BRICENO: No, not explicitly. That number is a little bit more of an estimate than it is a concrete plan of what the IRS hopes to do. In a 2021 Report, the IRS outlined what kind of updates it needed in terms of technology, workforce, and resources in order to stay competitive with developing methods of tax evasion—and they extrapolated that estimation a decade into the future. The report said that if Congress were to give the IRS $80 billion, they could use that money to hire up to 87,000 in a decade. So that figure is a projection of many many employees the IRS might need in 2031, based on how the IRS operates now. That doesn’t mean that they’re tied to hiring that many people.

But you can understand the concern, the IRS got exactly what they were asking for, so now observers can’t help but think, ‘well…now they have the funding…they’re probably going to do exactly what they said they were going to do.’

BROWN: Ok, I see. So what would these new employees be doing?

BRICENO: For now, filling the holes the IRS needs filled. But in the long run, the IRS hopes that by the end of a decade, that extra manpower can help bring in as much as $200 billion in lawfully-owned tax revenue. The IRS says a lot of taxable money is slipping through their fingers right now, but if they up their scrutiny, they can help bolster the government’s funding. Right now, they’re hoping to find that amount by increasing the number of audits on Americans making more than $400,000 annually, which is kind of problematic.

BROWN: Why is that a problem?

BRICENO: Well, you’ve got to wonder. Are there enough Americans to audit making $400,000 such that you could collect $200 billion over a decade? Things may change in 10 years, but as it stands right now, not everyone is so sure. I spoke with Rachel Greszler, a senior research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget. She says that number is a bit of a longshot if the IRS intends to only increase audits for people making $400,000 or more.

GRESZLER: Well, just the total amount of new money that they were projecting would come in from these audits is very large. And then thinking through, well, is there actually even that much money at the top and that much being avoided—whether it’s intentional or inadvertent? Yeah, I just don’t see them being able to generate $204 billion in new revenues from enforcement if they’re only going to be using that new funding to go after people that are making more than $400,000. The money just does not seem to be there, and that’s based on their own reports about how much comes in from additional audits.

BROWN: What will the IRS do if it can’t meet the numbers it says it can find?

BRICENO: That’s a good question. I don’t know that there’s a concrete answer to that just yet. But if they miss their projections, the Federal government will have less funds to work with or the IRS will have to find more people to audits and new loopholes to close.

BROWN: Leo Briceno, thanks so much.

BRICENO: Thanks for having me!

BROWN: To read more of Leo’s coverage of this story, we’ve included a link in today’s transcript. And if you’d like to receive our free newsletter on politics and government each Thursday look for The Stew at wng.org/newsletters.

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.