CMR and the IRS
Twisted Rhetoric from CMR's Echo Chamber
Preparation of annual federal income tax forms raises questions for every taxpayer. Did I miss something? Did I take advantage of all the legal tax breaks available to me? Will I be audited? The rules are complicated enough to make you wonder if you’ve done it right, but for most taxpayers, folk whose income is already reported to the IRS by W-2s and Form 1099s, the realistic likelihood of triggering an audit is minimal.
As the budget and workforce of the IRS has been cut during the last decade, so has the overall likelihood of an audit. From 2010 to 2020 the full time equivalent workforce of the IRS has shrunk from 95,000 to 75,000. The IRS audited 1% of returns overall in 2010. In 2015, the last year for which we have final data, the figure was only 0.6%. (It’s only 0.2% in 2018, but more from that year may still come under audit.)
Realistically, today the average taxpayer has only a 1 in 167 chance of an audit—and if there is nothing glaring on your return the odds are likely far less.
In that same 2010 to 2015 time period, for those reporting a “total positive income” of more than 10 million dollars, the odds of facing an audit from the IRS fell from 21.5% to 8.0%. and the total “recommended additional tax” stemming from those audits fell from 610M in 2010 to 223M dollars in 2015. These returns are often from people with complicated sources of income, people who hire high priced tax lawyers and accountants, professionals whose whole purpose is to find and exploit every available loophole in IRS regulations and defend the return against an audit by IRS.
With that perspective in mind one might reasonably expect one’s representative to Congress to support greater funding for the IRS to re-expand its efforts to enforce tax regulations, particularly on high income filers.
Imagine my anger and dismay (but not surprise) to receive an email from U.S. Rep. McMorris Rodgers dated December 1, 2021, containing the Q and A you can read at the bottom of this email. She flat out lies about H.R. 5376, the Build Back Better Act, on which she cast a Nay vote. CMR lacks the bandwidth—and probably also the intellectual curiosity—to actually read the relevant parts of the Act itself. (Click the link to bring the text of the Act up in your browser, then hit CMD-F and enter “SEC. 138401” to pull up the part on IRS funding.)
Here are the plain words of the Act describing the application of appropriated funds [the bold is mine]:
(1) …for necessary expenses for the Internal Revenue Service (IRS) for strengthening tax enforcement activities and increasing voluntary compliance, expanding audits and other enforcement activities, and modernizing information technology to effectively support enforcement activities, except that no use of these funds is intended to increase taxes on any taxpayer with taxable income below $400,000
That’s crystal clear. It directly contradicts CMR’s assertion that the average taxpayer should be fearful of expanded IRS scrutiny—and even if the scrutiny increased—the data presented above strongly suggests that it needs to increase. Apparently, CMR copied her lies and half truths from the Republican echo chamber that feeds the gullible with Republican talking points. Many of her cherrypicked “facts” are ginned up from a one page publication concocted by Republicans on the House Ways and Means Committee. The numbers on that page in part are alleged to come from the same IRS Table 17 cited to which I referred above. Footnote 1 even acknowledges that “The proposal [in the Build Back Better Act], by contrast, would return audit rates to the levels of about 10 years ago…” McMorris Rodgers and her echo chamber completely ignore the plain english of the bill itself for the purpose of disingenuously firing up fear of audits and intrusions by the IRS. This isn’t just politics—it is a bald-faced lie.
McMorris Rodgers should be ashamed of herself and her staff. She is shilling for the wealthy who would rather not have their tax avoidance schemes audited.
Here’s the copy of the relevant part of CMR’s email:
Q: Will there really be an extra 85,000 IRS agents hired to monitor our bank accounts? - Sandi from Rockford
A: Thanks for your question. The short answer? Yes, if the Democrats have their way. President Biden and the Democrats’ radical tax and spending spree, which already passed the House, gives the IRS $80 billion to hire approximately 87,000 new IRS agents to track and audit the financial transactions of Americans.
To make matters worse, the proposal will lead to an additional 1.2 million IRS audits each year, nearly half of which —more than 583,000— will hit middle class families making less than $75,000. Even the lowest income Americans would see more audits —more than 313,000—hitting Americans making up to $25,000 per year.
This approach is completely out of touch with reality and is a serious invasion of privacy. Hardworking families in Eastern Washington are already struggling to make ends meet thanks to President Biden’s inflation crisis, and now he wants to audit them too.
The bottom line is: Democrats are supercharging the IRS so they can wring an extra $200 billion out of hardworking American people while giving a $475 billion tax break to millionaires and billionaires in Democratic states.
Keep to the high ground,
P.S. The link CMR’s email offers in the last paragraph quoted above leads to an accusatory Republican screed that suggests it represents the entire Committee on Ways and Means of the U.S. House of Representatives. That is patent hogwash on its face. However, the SALT deduction (an acronym never spelled out in the screed) is a real thing. SALT stands for “State and Local Taxes”. The SALT Cap is a cap on the amount a high income individual can deduct for having paid state and local taxes. Removing that cap is, in my opinion, a legitimate gripe, an unnecessary sop to the wealthy. The suggestion that nixing the cap will benefit only the “millionaires and billionaires in Democratic states” is a lie—nothing but inflammatory rhetoric. If CMR were an honest legislator she would have participated in the crafting and amending of H.R. 5376 to leave the SALT Deduction Cap in place, not dishonestly snipe from the sidelines.