The IRS is poised to collect hundreds of billions of dollars more in delinquent and unpaid taxes than previously expected, according to a new analysis released Tuesday by the Treasury Department and the IRS.
Enforcement enhancements made possible with funds from the Democratic Inflation Control Act passed in August 2022 are expected to increase tax revenues by up to $561 billion from 2024 to 2034.
In 2022, the Congressional Budget Office estimated that tens of billions in new IRS funds provided by the IRA would increase revenue by $180.4 billion from 2022 to 2031. The IRS now says that if IRA funds are restored, renewed and diversified, estimated income could reach $300 billion. From 2024 to 2034, it will reach $851 billion.
Administration officials will use the report to guide President Joe Biden's economic policies as he seeks re-election and as the Internal Revenue Service faces constant threats to its funding. We are promoting it.
“This analysis shows that President Biden's investments in rebuilding the Internal Revenue Service could help the wealthy and big corporations pay the taxes they owe and reduce the deficit by hundreds of billions of dollars,” National Economic Advisor Lael Brainard said in a statement. ” he said.
“Congressional Republicans' efforts to defund the Internal Revenue Service demonstrate that they prioritize tax evasion by the wealthiest Americans and corporations over deficit reduction,” Brainard said.
The IRS received an $80 billion cash injection under the Inflation Control Act. But House Republicans included a $1.4 billion cut to the IRS in the debt ceiling and budget cuts bill passed by Congress last summer. A separate agreement took an additional $20 billion from the IRS over the next two years to be diverted to other non-defense programs.
Since then, the agency has been trying to show how it is spending the remaining funds in hopes of blocking the cuts. New customer service improvements were introduced as tax season began on January 29, and earlier this month the IRS announced it had recovered $500 million in unpaid taxes due to massive tax fraud.
Ensuring that people actually pay their taxes is one of the biggest challenges for tax collection agencies. Greg Riserson, the Treasury Department's assistant secretary for tax analysis, told reporters that from 2010 to 2019, the audit rate for billionaires fell by more than 70%, and the audit rate for large companies fell by more than 50%. Told. With IRA funding, “the IRS can reverse this trend,” Riserson said.
According to the IRS, the tax gap (the difference between taxes owed and taxes paid) has grown to more than $600 billion annually.
