Natassia Smick, a mother of two, is working on getting her bachelor’s degree. She and her husband earn around $33,000 annually and depend on $2,000 from the earned-income tax credit to help make ends meet. Unfortunately, instead of getting the tax refund they were owed and relied on, the Smick family was targeted with an invasive audit from the IRS.
Now, thanks to the Inflation Reduction Act, millions of hard-working, low-income Americans like Natassia could face similarly frustrating audits from the IRS.
The partisan bill rushed through Congress includes more than $80 billion in new funding for the IRS. Among other things, these taxpayer dollars will go toward hiring and training 87,000 new enforcement agents at the IRS to conduct even more audits. Democrats are claiming this expansion would serve to go after tax cheats and billionaires who can afford to pay more. But the facts tell a different story. Just a few months ago, a new analysis of IRS data clearly showed that poor Americans — earning less than $25,000 a year — are five times more likely to be audited by the IRS.
This unprecedented expansion of the IRS is bad enough. But what many people may not know is that this bill also includes millions of dollars for a taxpayer-funded study that will pave the way for the IRS to collect even more financial information from American families. In fact, the bill gives the IRS $15 million to study how the government could start preparing and filing tax returns on behalf of taxpayers. That may seem innocuous, but make no mistake: this provision is the first step to making the government our accountant.
A massive amount of personal information is needed to file a tax return every year and get a full refund. And that information changes from year to year. These are important changes that the government — especially an agency as backlogged and behind as the IRS — will struggle to maintain. If the agency was put in charge of generating and filing tax returns, it’s almost guaranteed that it wouldn’t be accurate, which, in the best-case scenario, means more precious time spent trying to fix their mistakes. That would be a nightmare at an agency that is answering only one in 50 customer service phone calls.
In the worst-case scenario, it would mean not getting the money owed. Millions of Americans who depend on critical tax credits, like Natassia and her family, could miss out on the full refund they are entitled to and rely on to pay their bills. In fact, a recent report from CNBC found that this proposal would make it harder for taxpayers to claim the earned income tax credit, the child tax credit, the child and dependent care credit, and more.
And while progressives in Congress rushed to push this clear conflict of interest through, even the IRS itself has said that a government-run system would not be a significant improvement for taxpayers.
The former heads of the IRS under presidents Barack Obama and Donald Trump agreed that a government-run tax prep system should not be a priority for the agency. And James McTigue, a director at the independent Government Accountability Office specializing in tax policy and administration, recently acknowledged that “it’s not 100 percent clear that the IRS could do better or as well as the private companies.”
This massive package, rushed through in the dead of night, has many concerning provisions, but those that expand the IRS and may force taxpayers to turn over even more personal information to the government in exchange for a system that experts acknowledge may not work is alarming.
Earlier this year, an overwhelming 75 percent of voters across the country said they would oppose proposals just like this, and 60 percent of voters said they would not support elected officials who pushed these proposals through. Members of Congress should remember they work for these voters and shouldn’t make tax season more difficult and even more invasive for hardworking Americans like Natassia.
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