The Internal Revenue Service (IRS) has announced a 50% increase in audit rates for wealthy taxpayers and large corporations. This decision is being funded by the Inflation Reduction Act signed into law by President Biden in 2022.
According to CNN, the audit rate for taxpayers earning over $10 million is expected to rise from 11% in 2019 to 16.5% in 2026. The IRS also plans to triple audit rates for large corporations with assets exceeding $250 million and increase audit rates for business partnerships with assets over $10 million tenfold over the next seven years.
Despite the increase in audit rates, the IRS clarified that they do not anticipate exceeding audit numbers from 2010 due to the growth and complexity of filings by large corporations, partnerships, and wealthy individuals. IRS Commissioner Danny Werfel assured that Americans earning less than $400,000 annually will not be targeted for audits.
There are concerns among Republicans about the IRS using this expansion to penalize middle-class Americans. However, White House officials have emphasized that there are no plans to increase audits for individuals making less than $400,000 per year. Additionally, the IRS recently raised the tax penalty for underpayments to eight percent after hiring 87,000 new agents.
In summary, the IRS is increasing audit rates for wealthy individuals and large corporations, but assurances have been made that middle-class Americans will not be targeted.
