The Internal Revenue Service (IRS) has been accused of launching a “witch hunt” against small businesses thanks to the Biden administration’s “Inflation Reduction Act.”
Republican Iowa Sen. Ernst alleged in a letter on Tuesday that the IRS is targeting small business owners over the agency’s plan to spend the $80 billion granted by the Democrat-backed “Inflation Reduction Act.”
“Now is simply not the time to place unnecessary burdens on our small businesses as they continue to grapple with recent economic challenges,” Ernst wrote in the letter sent to IRS Commissioner Daniel Werfel. “Instead of commencing on a witch hunt on small businesses by enhancing audit rates without justification, we should focus on tax solutions that promote small business growth and economic competitiveness.”
The senator went on to question Werfel on what guardrails are in place to protect small businesses “from potential data breaches by criminals and foreign adversaries.”
“It is not clear by which precedent the IRS determined that a large business is any entity earning more than $400,000 in revenues. Under this approach, enhanced tax enforcement efforts would sweepingly apply to small businesses across the country,” Ernst added.
This comes after the IRS recently announced that it is ramping up audits on everyone. According to an April 6 report by the U.S. Department of the Treasury and the IRS, the agency would begin using some of the legislation’s $80 million in funding to boost audits.
The target demographics are those who make more than $400,000 a year and business owners who file intricate taxes.
Since President Joe Biden signed the “Inflation Reduction Act” last August, some Republican lawmakers have claimed that the IRS would use the money to hire an army of 87,000 tax agents with weapons.
“The last thing the American people need right now are more audits from an out-of-control, bloated IRS,” said Nebraska Rep. Adrian Smith at the time. “The Inflation Act funding for IRS would lead to the hiring of 87,000 new IRS employees tasked with raising enough revenue to pay for Democrats’ Green New Deal priorities.”
There is also still a discrepancy between taxing the rich and low-income individuals, despite the agency’s promise to tax the wealthy.
