Irs's New Auditing Effort

Floor Speech

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Mr. COURTNEY. Mr. Speaker, I stand here today on March 11, 35 days away from April 15, the tax filing deadline for 2024.

This is certainly not a joyful or happy event, but it is important to acknowledge that the IRS recently reported that 85 percent of Americans pay their taxes on time.

For most others, extensions are requested due to paperwork delays, illness, or other exigencies, which is proof that the vast majority of Americans understand their civic and legal duty to file a return.

Mr. Speaker, 2 weeks ago, the IRS announced an astonishing new initiative to chase down 125,000 high-income individuals who--get this--have failed to even file a tax return since 2017.

That is right, 125,000 cases have been opened on individuals with income over $400,000 per year that filed no returns in the last 6 years--25,000 of those cases involved individuals with incomes of over $1 million per year.

It is hard to believe that anyone with that level of income would have the chutzpah to refuse to file a return and think they would get away with it. In fact, the IRS has reported that in all these cases, they received third-party information, such as W-2 forms from employers and 1099 forms from financial institutions that clearly indicate these people received income in these ranges but never filed their own return, and, of course, never paid the legally required tax.

How is it possible that such flagrant, arrogant behavior went unnoticed, you might ask? It is because Congress, most notably Republican majorities in Congress, for decades have willfully starved the IRS of staff and technology to track such freeloaders.

Here is the record: From 1994 to 2021, the workforce of the IRS has been cut by Republicans in Washington by one-third. At the same time, America's population has grown by one-third.

As a result of defunding the IRS, the IRS has been able to file its nonfiler program only sporadically since 2016. Because of this, tax cheats have gotten bolder and more brazen.

The good news, as the IRS Commissioner Danny Werfel reported 2 weeks ago, because of the Inflation Reduction Act which passed in the last Democratic-controlled Congress without a single Republican vote, the IRS now has more staff and technology to pursue such blatant tax cheats.

Werfel estimates that this nonfiler initiative alone is focused on financial activity of more than $100 billion.

Since this effort started 2 weeks ago, it is unclear exactly how much tax and penalty will be recovered, but given that the failure to file penalties of 5 percent per month on tax owed, conservative estimates are hundreds of millions of dollars will be recovered for past years and even more for future compliance.

I want to be clear. This effort is not auditing the content of taxpayer returns. These are cases of high-income earners who had the gall to not even file a return.

Mr. Speaker, this behavior is an insult to hardworking fellow Americans who obey the law and fulfill their civic duty, and at the end of the day bear the financial costs of this despicable misconduct.

Speaking of the middle class, Werfel made it clear that this new auditing effort on nonfilers is aimed at high-income tax cheats. That is in accordance with a Treasury directive by Secretary Janet Yellen that there would be no new enhanced IRS auditing on middle-class Americans. That makes sense.

The National Bureau of Economic Research estimates that audits aimed at the top 10 percent of Americans generate $12 of revenue for every $1 spent. That proportion declines dramatically with lower income filers.

It is a good thing that the 2022 Inflation Reduction Act is now at least partially restoring IRS's capacity to ensure that all of the rich actually file their returns and pay their fair share of taxes. It is a good thing that Democrats have blocked Republicans' efforts to once again cripple IRS's funding over the last year and a half.

Independent analysts such as the Congressional Budget Office have confirmed that this effort to track down scofflaws will actually cut the deficit. Indeed, the IRS announced that the Inflation Reduction Act effort will bring in 561 billion new dollars from 2024 to 2034.

For the 85 percent of Americans who work hard and play by the rules-- teachers, cops, nurses, factory workers, office workers, retirees, military servicemembers, to name just a few--who pay their taxes with each paycheck, making sure that the wealthy file their returns and pay, too, is fundamental to a fair and just society.

The Inflation Reduction Act is doing exactly that.

Mr. Speaker, so as this April 15 approaches, the message is now clear for the well-to-do delinquents: The free ride is over. You have to obey the law and file your return just like everyone else. This is not too much to ask. No more freeloaders.

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