Last fall, news began circulating that the Internal Revenue Service (I.R.S.) was planning a significant boost to individual and small business audits in 2021. Speaking at the American Institute of Certified Public Accountants annual conference in November 2020, De Lon Harris, the I.R.S. deputy commissioner of examination for small businesses, said, “The I.R.S. is focusing our efforts to increase compliance activity in this area of not only partnerships, but also investor returns related to pass-throughs.” For 2021 “we are planning for 50% more than we had in the previous year,” Bloomberg News reported.
With the incoming Biden administration, it was well known in Washington circles that the I.R.S. would be in the Democrats’ scope this year. I.R.S. funding boosts were left out of the COVID relief bills passed earlier this year and the first “budget reconciliation” spending bill. So the White House and Senate Democrats began eyeing the bipartisan infrastructure legislation as the vehicle as Republicans sought “pay-for” in any new spending plan, even one in which they were theoretically in support.
As negotiations began, the White House opened with a proposed $80 Billion in new funding for the I.R.S. Conservatives, including AMAC Action, pushed back.
“As we learned in 2013, Democrats have weaponized the I.R.S. as a political tool, and now they want an even more powerful I.R.S. to target their political enemies just as they did under Obama,” said David McIntosh, the president of the Club for Growth according to the New York Times. “Their proposal is not cost-effective even by optimistic estimates, and it’s just another example of the vicious tactics of the radical socialist left,” McIntosh said.
Conservative groups, including AMAC Action and our allies, have been voicing opposition to proposed tax increases, audits, and other backdoor attempts to take more from the pocket of America’s small businesses. It’s a fair argument for Senate Republicans to demand that more spending packages be paid for, not borrowed on the backs of hard working Americans and future generations. It’s wrong at every level,” Americans for Tax Reform President Grover Norquist said in June. “This is a fake way of pretending you’re paying for something.”
Around the same time, Republican Senators sent a letter regarding the ProPublica leaks demanding a full investigation. While Democrats and the mainstream media accused Republicans of blowing up negotiations over solid conservative principles, Republican Senators echoed conservative groups’ concerns about more audit funding. Ultimately, no I.R.S. funding was included in the bipartisan infrastructure deal when it passed the Senate on August 9 by a vote of 69-30.
Now Democrats are looking to add that audit funding, and possibly even more, to the next budget reconciliation legislation expected next month as government funding is set to expire on September 30. Democrats can pass such legislation with zero Republican votes, but they should be wary because while conservatives successfully pushed back politically, voters may push back at the ballot box next year.
Speaking to CNBC, Paul Axberg, a certified financial planner and C.P.A. at Axberg Wealth Management in Sun City West, Arizona, says, “If you’re an individual making over $400,000 a year, you should feel like you have a target on your back.”
Bob Carlstrom is President of AMAC Action
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