Rettig, chosen by former president Donald Trump to lead the IRS, also wrote to Neal to support additional third-party reporting requirements as useful for tax compliance. “Any suggestion that instead this reporting regime will be used to target enforcement efforts on ordinary Americans is wholly misguided.” “A reporting regime that is broad-based will better assist the IRS in targeting enforcement priorities on the high-end who accrue income in opaque ways,” Yellen’s letter said. Yellen’s letter is adamant that audit rates under the plan would not go up for “anyone with less than $400,000 in income.” The administration previously unveiled plans that would require financial institutions to provide additional information about taxpayer income to the IRS.
Yellen and Rettig state that compliance rates are under 50 percent for “opaque sources of income,” whereas compliance rates are at 99 percent for the wage and salary income paid by the vast majority of Americans.
Banking groups have opposed the measure and alleged it would saddle businesses with unnecessary compliance costs, while Republican lawmakers have said it amounts to an intrusion of the federal government into private taxpayer information. House Democrats have cited nonpartisan estimates suggesting that the new IRS funding could alone raise roughly $200 billion in new revenue over 10 years, but Treasury officials believe approving both measures in tandem could raise closer to $700 billion.
House lawmakers are trying to put the finishing touches on their version of the bill, but they still must negotiate the entire package with Senate Democrats and there is ample time for changes to be made. The IRS’s funding and powers are a central component of the $3.5 trillion economic package that Democrats are trying to advance through Congress.
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