Finance

Administration details Biden’s plan to provide $80B to IRS

IRS headquarters in Washington, D.C.
Greg Nash

The Treasury Department on Wednesday provided more details about President Biden’s proposal to boost IRS funding and strengthen compliance with tax laws, saying that these initiatives would generate $700 billion in net revenue over a decade.

“A robust and sustained investment in the IRS is necessary to ensure it can do its job of
administering a fair and effective tax system,” the department said in a fact sheet. “The IRS requires more resources to conduct investigations into underreported income and to pursue high-income taxpayers who evade their tax liability through complex schemes.”

The additional details come after the White House released Biden’s $1.8 trillion human-infrastructure proposal, called the American Families Plan, earlier in the day. Biden’s plan calls for enhancing the IRS’s enforcement efforts against wealthy individuals and businesses in order to help pay for new federal spending in areas such as child care and education.

Biden is set to discuss the plan in a speech Wednesday night before a joint session of Congress.

Treasury said that Biden’s plan would provide the IRS with about $80 billion over a decade to be used in areas such as modernizing technology to help the agency identify tax evasion, hiring and training auditors, and improving customer service. The department said that additional funds for enforcement will be focused on efforts to audit high-income taxpayers and businesses rather than middle-class Americans.

Biden’s plan would also direct financial institutions to report more information to the IRS, which would help the agency better target its tax-enforcement efforts. And it would give the IRS the ability to regulate paid tax-return preparers and enhance penalties for preparers who defraud taxpayers.

Biden’s proposal comes after IRS Commissioner Charles Rettig said at a Senate hearing earlier this month that the gap between the amount of taxes owed and those paid on time could be $1 trillion annually. The IRS saw budget cuts over much of the last decade, causing its staffing levels and audit rates to drop.

Biden’s families plan is not expected to get any Republican support, in part because it also proposes raising tax rates for high-income households. However, lawmakers on both sides of the aisle have expressed an interest in helping to ensure that individuals and businesses pay the taxes that they already owe.

Tags American Families Plan Internal Revenue Service Joe Biden Taxation in the United States

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