IRS Recruiting Auditors to Crack Down on One-Percenters

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You can tax the rich all you want. Getting them all to pay is the hard part. To that end, the Internal Revenue Service plans to hire thousands of new auditors.

The Artful Tax Dodger

The US Department of the Treasury published a report in 2021 that suggested more than $160 billion is lost each year from taxes that the top 1% of American earners choose not to pay. This widens the tax gap — the amount of taxes owed versus the amount collected — which totals around $600 billion annually.

To shrink that gap, President Joe Biden signed into law last year the Inflation Reduction Act, which will pump roughly $80 billion into the agency, allowing it to hire 20,000 employees over the next two years:

  • The IRS is looking for 3,700 auditors to work at 250 locations nationwide. Each auditor would receive a salary of about $125,000.
  • In a statement earlier this month, the IRS said it will “intensify work on taxpayers with total positive income above $1 million that have more than $250,000 in recognized tax debt.” The agency also said audit rates will not increase for anyone earning less than $400,000 a year.

Murk and Mire: The IRS budget has regularly been a point of contention between Democrats and Republicans, with the former arguing that more staff and better computer systems — some of which date back to the 1960s — will help hold the ultra-rich accountable, while the latter sees it as just filling the DC swamp. Earlier this year, the Republican-controlled House tried to block $80 billion in IRS spending, but it didn’t pass in the Senate.

Forbes magazine editor-in-chief Steve Forbes posits that the ultra-rich — supported by teams of accountants and lawyers ready to take on the IRS — will just get more emboldened with their tax-skirting. In turn, he says, the bureau will target small business owners and upper-middle Americans who don’t have the same legal and financial resources at their disposal as the top 1% does. And whoever said millionaires weren’t looking out for us average Joes?