April 18, 2022
President Biden wants to substantially increase the size and reach of the IRS, deeming it necessary to ensure that big corporations and the wealthiest Americans pay their fair share of taxes.
The administration said this expansion won’t affect the middle class or small businesses. But as more details emerge, we’re seeing those claims proven false.
If President Biden and the Democrats have their way, the IRS will double in size with $80 billion in new funding and 87,000 new tax agents. It would also receive $45 billion for enforcement activity alone, which will fund 1.2 million more tax audits each year. About half of those would hit households making less than $75,000 per year, according to analysts.
Recent tax policies have already complicated matters more for self-employed Americans and those working as contractors.
For instance, the threshold for which taxpayers had to file a 1099-K form went from $20,000 in payments and 200 transactions to just $600 in total transactions. This one rule introduced a huge paperwork burden for Americans earning money in such ways, not to mention the additional work for third-party processors.
President Biden also wants the IRS to track deposits and withdrawals of any bank account, investment account, and app-based account (e.g, Venmo, Cash App, PayPal, etc.), if the account exceeds $600 in total transactions. Now, with such low limits, the number of taxpayers involved in potential enforcement actions obviously multiplies. But how much money do they really think they’re going to raise?
The claim is that wealthy people are being targeted. However, the policy actions point to a broad-based effort to get more involved in the financial lives of basically every American taxpayer.