Under Biden, You’re 4 Times More Likely to Face an IRS Audit

1 in 111 taxpayers might be audited due to Inflation Increase Act.

"I direct that any additional resources… shall not be used to increase the share of small businesses or households below the $400,000 threshold that are audited relative to historical levels,” Treasury Secretary Yellen wrote to IRS Commissioner Charles Rettig.

That directive has been used by media "fact checkers" to deny that the massive increase in IRS personnel under Biden’s Inflation Increase Act will also increase audits of the middle class.

Yellen’s statement initially seems reassuring until you look closely at its curious language.

Treasury Department spokeswoman Julia Krieger used the same phrasing when claiming that "audit rates relative to historical norms for people earning under $400,000 each year" would not increase.

“Historical” is an interesting term. Media fact checkers act as if it means current rates. But if it means current rates, Yellen and the Treasury spokeswoman could have just said so. The specific use of “historical norms” by both women is not an accident: it’s policy.

What’s the difference between “current rates” and “historical levels”?

A Government Accountability Office (GAO) report noted that from 2010 to 2019, audit rates dropped from "0.9 percent to 0.25 percent" due to "reduced staffing as a result of decreased funding". Audit rates for taxpayers earning from $25,000 to $500,000 were even lower at 0.17%.

Would “historical norms” cover 2010? It’s hard to believe that they would not. Even the most generous interpretation of Yellen’s language is that IRS audit rates would significantly increase.

At 0.25 percent, 1 in 400 taxpayers might be audited while at 0.9 percent, that number would climb catastrophically to 1 in 111. That’s still a range, but it’s a markedly smaller one.

And Americans will be four times more likely to be audited after the Biden-Manchin bill.

Taxpayers earning between $75,000 and $100,000 had their audit rates drop 30%. Those making from $200,000 to $500,000 had theirs fall 72%.

A 72% increase in middle class audits would then be well within “historical norms”.

And that’s just the beginning:

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