AYESHA RASCOE, HOST:
The IRS is about to get a big infusion of cash. As part of the new climate and health care bill, the tax collection agency is set to receive $80 billion over the next decade. Some of that money will go to update old computer systems, and some is for improving customer service, like the IRS phone line, where 9 out of 10 calls go unanswered. And as NPR's Scott Horsley reports, most of the money is for stepped-up enforcement to help the IRS collect taxes people haven't been paying.
SCOTT HORSLEY, BYLINE: The Treasury Department estimates about $600 billion in federal taxes goes uncollected every year, much of it owed by wealthy taxpayers who underreport their income. To tax policy counselor Natasha Sarin of the Treasury Department, it's about time there are some new tax cops on the beat.
NATASHA SARIN: By beefing up the IRS's capacity to go after wealthy tax cheats, you're going to be able to collect at least 400 billion of that over the course of the next 10 years and, I suspect, substantially more.
HORSLEY: For years, tax scofflaws have faced little risk of getting caught as the number of IRS audits has steadily declined. Republican lawmakers were united in their opposition to additional enforcement funding. Texas Senator Ted Cruz told Fox Business his constituents have not been clamoring for more IRS agents.
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TED CRUZ: Imagine IRS agents descending upon America like a swarm of locusts. And by the way, these IRS agents aren't there to go after billionaires. They're there to go after you. They're there to go after your small business. They're there to go after your family.
HORSLEY: But both the Treasury secretary and the IRS commissioner - who's a Trump appointee, by the way - insist stepped-up enforcement efforts will not target middle-class taxpayers. Sarin says Cruz and other GOP opponents are simply fearmongering.
SARIN: Let's be very clear about what these resources are and are not doing. These resources are not raising audits on any small business or on any household that makes under $400,000 a year.
HORSLEY: The new money will help to reverse more than a decade of underfunding at the IRS. The agency's enforcement ranks have shrunk by 30% since 2010. As experienced auditors have left, the IRS has increasingly focused on simpler audits involving lower-income families, even though they account for a small share of unpaid taxes. Syracuse University researcher Susan Long says 46% of last year's audits were aimed at people who receive a special tax credit for working-class families.
SUSAN LONG: Enforcement levels have really dropped except for these poor, lowest-income group where you can just send the letter in the mail. They're easy marks.
HORSLEY: Meanwhile, Long says, the IRS audited just 2.2% of millionaires' tax returns last year, a steep decline from 2015.
LONG: Most millionaires don't even look at their return, even though all of the studies show that that's where the money is.
HORSLEY: Indeed, the vast majority of ordinary wage earners already pay the taxes they owe. They don't have much choice since their income is reported directly to the IRS. It's wealthy taxpayers with less transparent sources of income who are less likely to pay. They can hire lawyers and accountants to help sidestep the tax collector. And Sarin says the IRS has been outgunned until now.
SARIN: This has been a David-and-Goliath battle for far too long. We're finally giving the IRS the tools it needs to be able to meaningfully police evasion at the top of the distribution.
HORSLEY: Sarin says that will not only enable the IRS to collect more money for the government but also make for a fairer tax system.
SARIN: This is about bringing an end to a two-tiered tax system where certain taxpayers have the opportunity to evade and other taxpayers are making good on their obligations and are fully, voluntarily compliant, which is the vast majority of taxpayers.
HORSLEY: Sarin says for middle-class people who are already paying what they owe, the risk of being audited should go down.
Scott Horsley, NPR News, Washington.
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