Finance

Ex-IRS heads say reconciliation bill will help agency target wealthy tax cheats

AP Photo/Patrick Semansky
FILE – A sign is displayed outside the Internal Revenue Service building May 4, 2021, in Washington.A new government watchdog report finds that while most Americans are eligible to file their taxes for free, only a fraction use the services provided through the government. (AP Photo/Patrick Semansky, File)

Three former heads of the Internal Revenue Service (IRS) are throwing their support behind a Democratic effort to boost funding for the tax agency to help target higher-income individuals and corporations they say “illegally evade their tax obligations.”

Fred Goldberg, who headed the agency under then-President George H. W. Bush, joined Charles Rossotti and John Koskinen, who led the IRS under the Clinton and Obama administrations, respectively, signed onto a statement released Thursday backing the reconciliation spending bill effort. 

In the statement, the former commissioners bemoaned what they described as “the status quo” at the IRS, saying the agency “has shrunk to 1970s levels with technological infrastructure that is decades out-of-date and an audit rate that has dropped by 50 percent.”

The commissioners argued Democratic efforts to invest $80 billion in the agency to help beef it up and bolster enforcement of tax laws would lead to “vastly improved services for taxpayers.”

The proposal is one of several tax-related provisions included in Democrats’ Inflation Reduction Act to raise revenue to help cut the nation’s deficit over the next decade, which they argue in turn will combat inflation. Though there is disagreement among experts about how much of an impact the bill would have on rising prices.

The party wants to pass the mammoth tax reform and revenue plan in the coming days using a complex procedure known as budget reconciliation that will allow it to approve the measure in the evenly split Senate without Republican support.

“The sustained, multi-year funding contained in the reconciliation package is critical to help the agency rebuild. That will mean vastly improved services for taxpayers, who will be able to interact with a modernized IRS in a digital way, whose questions will be answered and issues resolved promptly and fairly, and who will find it simpler to get access to the benefits and credits to which they are entitled,” the commissioners wrote.

“It will also mean the capacity to enforce the tax laws against sophisticated taxpayers who today evade their tax obligations freely, because they know that the IRS lacks the tools it needs to pursue them,” they said. “To be sure, the vast majority of workers already pay what they owe, which is why the Administration has been clear that audit rates wouldn’t increase for families making under $400,000 annually.”

The claim comes as Republicans have particularly needled the IRS-centered proposal from Democrats, arguing it would lead to increased audits on all individuals and pain for small businesses.

However, the commissioners argued in their statement that “for ordinary Americans who already fulfill their tax obligations, audit scrutiny will decline, because the IRS will be better at selecting returns for examination.”

“This bill is about getting to the heart of the problem and pursuing high-end taxpayers and corporations who today illegally evade their tax obligations,” they added.

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