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Iowa’s Republican U.S. Sen. Joni Ernst says an increase in Internal Revenue Service audits would include all taxpayers, not just those with high incomes.
A Congressional Budget Office says that, but adds that the rate of increased audits for lower-income taxpayers would not match that of higher-income payers or large corporations.
Each month, U.S. Sen. Joni Ernst, R-Iowa, announces a “Squeal Award” to an example of what she calls improper government spending or behavior. It’s her attempt to expose Washington-based waste while keeping a campaign promise she made when first running for the Senate in 2014 to “make `em squeal” in the nation’s capital.
Her August Squeal Award went to the Internal Revenue Service, a favorite Republican punching bag, especially since congressional Democrats passed President Biden’s Inflation Reduction Act earlier in the month. Earlier in August, for example, Sen. Ron Johnson, R-Wisconsin, complained that the IRS had been auditing people earning less than $25,000 a year at a rate five times that of high-income earners. PolitiFact Wisconsin rated that claim to be Mostly True.
In her newsletter, Ernst blisters the IRS for having 1,250 employees turn up in a 2019 report for not paying taxes on time or at all and says the IRS ought to be audited. She added:
“The nonpartisan Congressional Budget Office says with the supersized staff, the IRS audit rate ‘would rise for ALL taxpayers’ regardless of income, and would even result in audits of innocent Americans who have paid their taxes and don’t owe the IRS anything.”
PolitiFact has written extensively about the Inflation Reduction Act, which authorized hiring 87,000 IRS agents to catch up on a tax return audit backlog, focus on high-income earners, and upgrade IT and customer service. So, we checked the CBO report Ernst cited.
Ernst included in her newsletter a link to that September 2021 CBO report from its Director Phillip Swagel.
Ernst was right about all income levels being subjected to audits, but she left a few things out of her description of what the report said.
“The proposal, by contrast, would return audit rates to the levels of about 10 years ago; the rate would rise for all taxpayers, but higher-income taxpayers would face the largest increase,” the report added.
The Biden Administration’s policies for enacting the law “would focus additional IRS resources on enforcement activity aimed at high-wealth taxpayers, large corporations, and partnerships. CBO estimates that if the proposals were enacted, tax compliance would be improved, and more households would meet their obligation under the law.”
The CBO report says, as Ernst noted, that some audits could fall upon taxpayers who owe no additional taxes.
“However, the Administration’s proposal for more information reporting, as well as additional spending on IRS technology, might reduce the burden on compliant taxpayers by allowing the IRS to better target noncompliant ones and to reduce the number of audits that resulted in no change in tax assessment,” the report states.
Ernst said a nonpartisan CBO report raised a flag about the Inflation Reduction Act’s impact on all taxpayers by allowing increased audits, regardless of income and even for those who don’t owe on their taxes.
Ernst left out pertinent information that is in the CBO report, though. The analysts determined that the new law would bring audit rates back to where they were 10 years ago and that the rate of audits of high-income taxpayers would increase more than for lower-income taxpayers. Biden Administration policy would target higher-income payers, the report states.
But, the report warns about the possibilities facing lower income earners. We rate her statement to be Half True.
H.R.5376 – Inflation Reduction Act of 2022
Joni Ernst newsletter, Aug. 24, 2022
Joni Ernst website
Congressional Budget Office, “The Effects of Increased Funding for the IRS,” Sept. 2, 2021
Chuck Grassley press office, “Q&A: Beefing up the IRS,” Aug. 19, 2022
PolitiFact, “Kevin McCarthy’s mostly false claim about an army of 87,000 IRS agents,” by Jim Greenburg, Aug. 11, 2022
PolitiFact, “Johnson’s claim on IRS audits of mostly low wage earners is in the ballpark,” by D.L. Davis, Aug. 25, 2022