This is why enforcement has been so lopsided—the IRS has been going after regular people with audits because they’re so much easier. The millionaires and billionaires and corporations who commit fraud can afford to hire accounts and lawyers and fight audits, and the IRS simply doesn’t have capacity to fight that.
Decades of budget cuts have left the agency with ancient computer systems and far too few staff members. The House Budget Committee acknowledged these problems with the IRS in a report in 2020. “The Internal Revenue Service (IRS) has faced harsh budget cuts over the last decade, hindering its ability to serve the American people in fundamental ways,” the committee said. “Even before the pandemic, the underfunded IRS struggled to carry out its core functions of tax collection and enforcement.”
That means a lot of tax cheats—the big ones who could owe hundreds of thousands or even millions—have been getting away with it. “According to a recent report by the Treasury Inspector General for Tax Administration (TIGTA), due to a lack of resources, the IRS failed to audit more than 897,000 wealthy individuals who skipped out on filing tax returns over three years—and these individuals owed nearly $46 billion in taxes,” the committee reported. This comes after decades of Republicans vilifying, attacking, and starving the agency.
The Build Back Better legislation would help fix this. It still includes $44 billion to build the IRS’s enforcement capabilities back. The Biden administration estimates that would add $400 billion to the Treasury in unpaid taxes.“The framework will create a fairer tax system through transformation investments in the IRS: hiring enforcement agents who are trained to pursue wealthy evaders, modernizing outdated IRS technology, and investing in taxpayer service, so regular Americans can get their questions answered and access to the credits and benefits they are entitled to,” the White House said.
Democrat Joe Manchin doesn’t want that to happen. Hmm, I wonder why.