Democrats Ask The IRS Why Tax Audits For The Poor Have Doubled

Two congressional Democrats are pressing the Internal Revenue Service for more details about why the audit rate for the lowest-earning households has nearly doubled in the past year, in face of pledges by President Joe Biden to restrain such examinations.

Senator Elizabeth Warren of Massachusetts and Representative Judy Chu of California asked IRS Commissioner Chuck Rettig to explain a rise in audits of those earning less than $25,000, which is at odds with Biden’s policy of not increasing tax examinations for those earning less than $400,000.

“We know the IRS suffers from underfunding, and we are working to secure substantial, permanent funding so the IRS can take on the tax cheating of giant corporations and the ultra-wealthy,” the progressives Chu and Warren wrote in a letter obtained by Bloomberg News. “But, we also urge you to move swiftly to end the targeting of low-income Americans, in line with the administration’s commitment.”

The lawmakers referred to recent data from Syracuse University that found that 1.3% of households making less than $25,000 were audited in the 2021 fiscal year — up from 0.79% the previous year and notably higher than the 0.45% rate for households earning $200,000 to $1 million.

Warren and Chu said they were concerned that the IRS is increasingly using correspondence audits — examinations conducted by mail — to audit low-income taxpayers, because they are simpler and cheaper than the more complex examinations needed to audit wealthier taxpayers.

Overall audit rates have hit record lows in recent years, with the IRS facing a series of budget cuts and retirements that have depleted its teams. Biden has pushed for an $80 billion investment over a decade to rebuild the agency’s enforcement capabilities, but that effort is stalled in the Senate.

The two lawmakers asked for the IRS to respond to their letter by April 25.

This article was provided by Bloomberg News.

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