President Joe Biden’s nominee for the Internal Revenue Service’s (IRS) helm, Daniel Werfel, faced a barrage of inquiries from legislators on Wednesday concerning his plans for managing $80 billion in forthcoming funds to the organization over the next decade.
Werfel, a prior acting IRS commissioner, provided testimony before the Senate Committee on Finance in the morning. The Senate, where Democrats hold a slim majority, is anticipated to subsequently confirm his appointment.
Werfel Encounters Tough Queries on Reviving Tax Agency
Before approval, Werfel responded to probing queries about utilizing the newfound resources for rejuvenating the beleaguered tax institution and determining which taxpayers may encounter heightened audit frequencies.
Werfel pledged to adhere to Treasury Secretary Janet Yellen’s previous edict stating that the IRS shall not employ the supplemental funding for elevating audit rates—compared to historical levels—for households earning below $400,000 annually.
Focusing on High Earners’ Tax Compliance
Werfel stated during the hearing, “If I am fortunate enough to be confirmed, the audit and compliance priorities will be concentrated on augmenting the IRS’ capacity to ascertain that America’s top earners abide by pertinent tax regulations.”
He also emphasized the need to address the potential erosion of public trust if impoverished individuals face higher audit probabilities than the affluent.
H2: Senator Crapo Expresses Concerns Over Fund Usage
Nonetheless, Republican Sen. Mike Crapo of Idaho, the committee’s ranking member, expressed his “grave apprehension” regarding the fund allocation for intensifying tax enforcement. He noted Yellen’s directive contained “ample ambiguity.”
Sen. Crapo informed Werfel he anticipated no “ambiguity” in this commitment.
Democrat’s Law Allocates $80 Billion to IRS Over a Decade
The extensive Inflation Reduction Act, ratified along party lines the previous year, endorsed $80 billion for the IRS throughout a decade. This allocation aims to assist the organization in tackling tax evaders and enhancing taxpayer services. Estimates suggest that, by amassing additional taxes, the agency might augment federal revenue by over $100 billion during that span.
GOP Targets IRS Funding Amidst Political Debate
Numerous Republicans have transformed the IRS and its supplementary funding into a political focal point, alleging that the investment will culminate in further audits of diligent Americans.
Upon seizing control of the House earlier this year, the GOP’s initial legislative votes centered on the IRS. One bill advocates for revoking nearly all novel funding for the agency, while another seeks to dismantle the IRS entirely. However, given the Democrats’ continued Senate control, the likelihood of either bill becoming law is minimal.
The Inflation Reduction Act stipulates that the IRS’s fresh investment is not “meant to escalate taxes on any taxpayer or small enterprise with a taxable income under $400,000.” Despite this, ambiguity remains concerning the IRS’s strategy for increasing audits.
Debunking Exaggerated Claims by Republican Leaders
Prominent Republican leaders persist in propagating the overstated assertion that the $80 billion in new funding would be employed to recruit 87,000 auditors targeting diligent Americans.