IRS Closing Audits of Wealthy Taxpayers

Donald Trump’s mass firings at the Internal Revenue Service are forcing premature closure of audits of wealthy taxpayers, which in turn will likely cost millions in missed tax revenue.

Audits of large corporations and wealthy individuals require more effort and expertise than audits of other taxpayers. They have more extensive and complex financial affairs to wade through than an average taxpayer. They are also believed to commit the lion’s share of cheating on their tax filings and payments, and the amounts involved dwarf the amounts at stake with an average taxpayer. The Treasury Department estimated in 2019 that the topmost 1% of Americans accounted for 28% of the approximate $163 billion gap each year between taxes owed and taxes paid.

Expansion of auditing was made possible by $80 billion in new funding from the 2022 Inflation Reduction Act. An order from then-President Biden barred the IRS from using that funding to increase audits on taxpayers making less than $400,000 per year, so audit expansion was focused on wealthier taxpayers.

Congressional Republicans cut that new funding in half, and now Elon Musk has swung his axe through the workforce on behalf of Trump, whose businesses have a checkered past with the IRS. Although the 6,700 employees taken out of the IRS by mass firings were labeled as probationary, many had been hired for high levels of expertise needed for complex audits and some had been promoted within the agency for their skills.

Click here for more details.