Tax Gap Reform
and IRS Enforcement Act provides guardrails around proposed IRS funding
Washington, D.C.–Seeking
to protect taxpayers against Democrats’ campaign to monitor Americans’ bank
accounts, place taxpayer finances in a surveillance dragnet, and provide
massive, additional mandatory funding to IRS for an army of IRS agents, U.S.
Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and U.S. House
Ways and Means Republican Leader Kevin Brady (R-Texas) introduced the Tax Gap
Reform and Internal Revenue Service (IRS) Enforcement Act.
“In light of recent proposals to massively expand the IRS,
with unprecedented amounts of mandatory funding, and the IRS’s continued abuses
of taxpayer rights and privacy, any additional IRS funding and monitoring of
Americans’ private finances must come with guardrails to help protect against
abuses,” said Crapo. “This legislation
places important guardrails around IRS funding to protect taxpayers’ rights and
privacy.”
“Before American taxpayers are subjected to 80,000 new IRS
agents and surveillance of their private bank accounts, let’s begin with an
accurate, independent estimate of Treasury’s so-called ‘tax gap,’” said Brady. “This bill also protects taxpayers from IRS targeting based
on their political or religious beliefs and closes loopholes that risk leaking
private taxpayer returns.”
Background:
Under the guise of closing the “tax gap,” Democrats are
seeking to increase IRS funding by a massive $80 billion over the next 10 years
to expand “enforcement and compliance activities” at the IRS, and to create a
“comprehensive financial account information reporting regime,” under which
gross inflows and outflows of taxpayers’ financial accounts are reported by
financial intermediaries to the IRS, effectively acting as IRS agents.
Key provisions of the TaxGap Reform and IRS Enforcement Act:
- Tax Gap
Reform: Requires timely, annually-updated information on tax gap estimates
in coordination with the Joint Committee on Taxation. - Taxpayer
Protection: Prevents the IRS from targeting Americans for their political
and ideological beliefs, codifies President Biden’s pledge to not increase
audits of taxpayers making less than $400,000 per year, and prohibits the
establishment of new bank reporting requirements. - Smarter Enforcement:
Requires the IRS to use existing data and tools to improve its corporate audit
selection process and increase enforcement against high-income non-filers. - Closes
the Expertise Gap: Creates an IRS enforcement fellowship pilot program to
assist with the agency’s most complex audits and case selection decisions. Before hiring thousands of new agents,
Congress should test the effectiveness of increasing expertise in a targeted
way.
Original Senate co-sponsors include John Barrasso
(R-Wyoming), Mike Braun (R-Indiana), John Boozman (R-Arkansas), Bill Cassidy
(R-Louisiana), Kevin Cramer (R-North Dakota), James Lankford (R-Oklahoma), Lisa
Murkowski (R-Alaska), Mike Rounds (R-Nebraska), Marco Rubio (R-Florida), Thom
Tillis (R-North Carolina) and Todd Young (R-Indiana).
The legislation
is supported by the National Taxpayers Union, Americans for Tax Reform and the
Center for a Free Economy.
“This legislation is a strong alternative to recent
proposals that would write an $80 billion check to the IRS with too little
forethought,” said Pete Sepp, President
of the National Taxpayers Union. “If
lawmakers move forward with an Internal Revenue Service (IRS) budget boost
anyway, these reforms and more should be considered prerequisites for any major
proposed increase in the IRS budget, and would both safeguard taxpayers’ rights
and support taxpayers’ interest in an effective, modern, and agile IRS.”
“Democrats want to give the IRS $80 billion and hire 87,000
new agents so they can harass and audit taxpayers and create a new reporting
regime that targets any bank account, Venmo account, or financial account
exceeding $600 in gross inflows and outflows,” said Grover Norquist, President of Americans for Tax Reform. “This should be alarming given the IRS has a
long history of failing to do its job and targeting taxpayers based on their
political beliefs. The Tax Gap Reform and IRS Enforcement Act introduced by
Congressman Brady and Senator Crapo takes steps towards protecting taxpayers by
implementing important safeguards against potential new IRS targeting and
abuse.”
“Congressional Democrats’ answer to Americans’ frustrations
with the IRS is to hire more tax bureaucrats to audit them,” said Ryan Ellis, President of the Center for a
Free Economy. “This bill provides a
welcome reform-based alternative. People are fed up with being told they are
tax cheats by academics and bureaucrats who have never signed the front of a
paycheck, and that they must become the subject of fishing expedition audits in
service to a fabricated ‘tax gap.’ Reining
in the tax gap estimation and audit process gives taxpayers a fair shake if the
tax man comes knocking. Congress should focus on getting the IRS to answer
phone calls and correspondence in a timely manner, not on new audits.”