IRS Accused Of “Witch Hunt” After Major Proposal

As part of President Joe Biden’s climate change “Inflation Reduction Act,” the IRS will be awarded $80 billion that Sen. Joni Ernst (R-IA), a senior member of the Senate Small Business Committee, had termed a “witch hunt” that the Biden Administration and the IRS will wage against America’s small businesses.

Part of the $80 billion plan Democrats passed is designated to hire 87,000 IRS employees over the next ten years. 

In a letter to IRS Commissioner Daniel Werfel, Ernst complained that increasing the number of small business audits with no justification is unfair. She encouraged sensible tax solutions that would promote business growth and competition.

One major issue Ernst centered on is the proposed increase in “enforcement activities” of small businesses with annual incomes of $400,000. No other industry has as low a standard. 

US Census shows that small businesses with 1-4 employees had average annual revenues of $424,000, up from $387,000 in 2007. The Iowa Senator requested that Werfel define if the $400,000 is gross revenues or net after taxes and expenses. 

According to the Small Business Administration (SBA), there are 33.2 million small businesses or 99.9 percent of all companies in the United States.

President Biden and Treasury Secretary Janet Yellen said that the $80 billion would not be used to fund increased audits of middle- or low-income taxpayers with an annual income of less than $400,000.

According to Rep. Jason Smith (R-Mo), Biden’s Inflation Reduction Act tax policies could devastate Americans whether they make more or less than $400,000, according to Rep. Jason Smith (R-Mo).

Unfortunately for small businesses, Ernst points out a provision in the act that clearly says that audit rates of smaller businesses will not be increased for both small businesses or households making $400,000 or less annually. 

Ernst warns that small businesses in the United States will be targeted in larger numbers by the increase in IRS personnel than enforcement efforts directed at wealthy earners or large corporations.