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Bidenomics: 63% of new audits target Sub-$200K taxpayers

Bidenomics: 63% of new audits target Sub-$200K taxpayers
Jordan Major

Despite President Joe Biden’s stated intentions for the Internal Revenue Service (IRS) to focus more on auditing the ultra-wealthy and less on the middle class, recent figures indicate a different reality. 

As of Summer 2023, an overwhelming 63% of new audits targeted taxpayers with incomes of less than $200,000, as revealed by data compiled by The Wall Street Journal’s editorial board, which labeled these individuals as the “IRS’s most wanted.”

Further complicating the IRS’s efforts is a report from March by the U.S. Treasury Inspector General for Tax Administration (TIGTA), which criticized the agency for its slow progress. 

Despite an operational blueprint designed to overhaul its auditing approach and achieve “transformational change for taxpayers,” the IRS has completed only 33% of its planned 58 milestones for Fiscal Year 2023, leaving it unclear how or when it will address the remainder.

IRS to increase tax audits

In a move to bolster enforcement, the IRS announced a plan to significantly ramp up audits for large corporations, partnerships, and multimillionaires over the next three years. This push forms part of a broader strategy to increase collections through enhanced enforcement and recruitment, fueled by $60 billion in funding from the 2022 Inflation Reduction Act. 

The IRS aims to nearly triple the audit rate for corporations with assets over $250 million by 2026, targeting an audit rate of 22.6%, a significant jump from the 8.8% rate in 2019.

However, data from the Transactional Records Access Clearinghouse at Syracuse University highlights that individuals earning up to $200,000 continue to be the most frequently audited, accounting for 67% of cases.

Contrastingly, the efforts to audit the ultra-wealthy have been less fruitful. According to the TIGTA report, the IRS is still in the preliminary stages of hiring the first cohort of revenue agents and specialists needed to handle audits for large corporations, large partnerships, and high-income individuals, indicating significant delays and challenges in redirecting its focus as originally planned.

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