What the IRS’s Plan to Hire 87,000 Workers Means for Taxpayers
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What is the main topic discussed in this episode?
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What is the new IRS funding in the Inflation Reduction Act and when was it passed?
Here's your Money Briefing for Friday, August 19th. I'm Daniela Cheslow for The Wall Street Journal, filling in for J.R. Whalen. A major spending bill that became law this week gives $80 billion of new funding to the IRS. What will that mean for your tax return and your chances of getting audited?
The IRS has to hire and staff up. It has to train people. It's a tight labor market, and it's It can take three to five years for a top auditor to be fully trained and productive.
That's Wall Street Journal tax reporter Laura Saunders.
What types of workers and upgrades will the $80 billion enable the IRS to hire and fund?
Coming up, we'll talk with her about what the new IRS funding will do and will not do and what taxpayers need to know about it. That's after the break.
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Why does the IRS need this funding and what outdated systems are being replaced?
The Federal Inflation Reduction Act is now law after President Biden signed it this week. It includes $80 billion in new funding for the taxman to be spent over a decade. So what will that mean for taxpayers? Joining me now is Laura Saunders, who covers taxes for The Wall Street Journal. Hello, Laura. Hello, nice to be here. Great to have you here. So $80 billion, what does that get you when it comes to the IRS? New workers? What kind?
Well, it gets new agents, it gets new funding for systems modernization, for technology. You know, the IRS is auditing far fewer people than it did 10 years ago, and that's good for tax cheats and not good for honest taxpayers. And its workforce is aging. It's losing about 50,000 people over the next few years for attrition. And so the law calls for hiring about 87,000 people over 10 years.
Will the IRS use the new money to increase audits of middle‑income taxpayers?
Many will replace people that are leaving.
The IRS already gets funding every year. It's about $13 billion this fiscal year, right?
Yes.
What is the reason for the new funding?
The rationale for the new funding is that the IRS's resources are so depleted that they need to be rebuilt. They're using computers from the early 1960s. When a machine breaks, it's no longer made, and so somebody has to fashion special parts for it. The idea, supporters say, is that this money will allow the IRS to do its job.
No Republicans voted for this bill in Congress, and at least one member of the party claimed armed tax collectors will show up at people's doors. Other Republicans said now the IRS will come after middle-income Americans who maybe just messed up their taxes by accident. How valid are these critiques?
Well, there won't be 87,000 new IRS agents with guns. Only a few special agents are allowed to carry guns. It's about 2,100 agents now, and they may hire a few hundred more, but that will still be less than the IRS had in the mid-'90s. At that point, it was 3,500.
Which taxpayers and transactions are most likely to face increased scrutiny?
Other people have said it will allow the IRS— to come after middle-class taxpayers who made a mistake on their tax returns. The Treasury disputes this intensely. It says that no American earning less than $400,000 a year will stand a greater chance of audit.
Who do you think could expect to be audited, and at what income levels? When might we see that happening?
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:00–0:35
2
What is the new IRS funding in the Inflation Reduction Act and when was it passed?
0:35–1:12
3
What types of workers and upgrades will the $80 billion enable the IRS to hire and fund?
1:12–1:59
4
Why does the IRS need this funding and what outdated systems are being replaced?
1:59–2:54
5
Will the IRS use the new money to increase audits of middle‑income taxpayers?
2:54–4:04
6
Which taxpayers and transactions are most likely to face increased scrutiny?
4:04–5:09
7
How soon will taxpayers see more audits and how long does IRS training and hiring take?
5:09–6:09
8
What impact will the funding have on the IRS backlog of paper returns and timelines for resolution?
6:09–7:43
Speakers
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