The IRS is planning to audit more high-income taxpayers, Treasury Secretary Steven Mnuchin told House lawmakers. The plan comes on the heels of recent reports that the IRS has conducted more audits of lower-income taxpayers largely because of the increased complexity and resources needed for high-income examinations.
“I have specifically directed the IRS Commissioner to come up with a plan to increase the amount of funding so that we can audit more high-income earners,” Mnuchin told lawmakers during a March 3 House Ways and Means Committee hearing on the president’s fiscal year (FY) 2021 Budget. “That is specifically in our plan,” he added.
Mnuchin also told lawmakers that the president’s request for an increase in IRS funding would help accomplish the modernization and improvement of the agency. “Of particular interest to this Committee, we are requesting $12 billion for the Internal Revenue Service (IRS). This includes funding to implement the Taxpayer First Act and the third year of the Integrated Business Systems Modernization Plan,” Mnuchin said. “We continue to bring the IRS into the 21st century by updating systems and utilizing data analytics and other technological advancements to enhance the effectiveness of audit enforcement activities.”
The Trump administration’s FY 2021 budget request proposes $12 billion in base funding for the IRS, which would provide an increase from currently enacted levels of $11.5 billion. The budget would also provide $300 million to continue the IRS’s modernization efforts.
“I am pleased to see a slight increase in IRS funding in the president’s budget, but the request still falls far lower than the amount the agency received a decade ago,” Chairman Richard Neal, D-Mass., said during the hearing.
Additionally, Mnuchin and lawmakers discussed commonality in moving forward on a bipartisan infrastructure plan. Recently, both Trump and House Democrats have separately outlined their infrastructure priorities.
“Before the administration begins to entertain any proposals for temporary tax cuts, the most important way that we can proceed… if we were to develop a stimulus package, the soundest way to do that is clearly to proceed with a major infrastructure initiative,” Neal said. Neal’s comments appeared to be in response to a tweet by President Trump in which he recommended a temporary payroll tax cut as a means for economic stimulus.
“If there is a need to stimulate the economy… I am sure that infrastructure is a priority for the president,” Mnuchin told lawmakers.