Yellen tells IRS not to increase middle class audits if it gets more funding

U.S. Treasury Secretary Janet Yellen holds a news conference in the U.S. Treasury Department’s Treasury Room in Washington, July 28, 2022. REUTERS/Jonathan Ernst

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WASHINGTON, Aug 10 (Reuters) – U.S. Treasury Secretary Janet Yellen told the Internal Revenue Service on Wednesday that if the Inflation Reduction Act becomes law, additional IRS resources should not be used to increase audit rates for taxpayers earning less than $400,000 per year.

The legislation, which passed the Senate over the weekend without Republican support, increases the IRS budget by about $80 billion over 10 years.

Democrats say tougher IRS enforcement will increase tax collection and help foot the $430 billion bill, which tackles climate change and lowers prescription drug costs for seniors , among other provisions.

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Republicans have criticized the extra funding for IRS tax enforcement, saying the agency won’t just focus on the wealthiest taxpayers, but will also go after middle-class families.

Yellen told IRS Commissioner Charles Rettig in a letter released by the Treasury Department that any new IRS staff “will not be used to increase the share of small businesses or households below the 400,000 threshold. $ which are audited against historical levels”.

The IRS is an office of the Treasury Department.

Yellen said that “contrary to misinformation from opponents of this legislation, small businesses or households earning $400,000 a year or less will not see an increased chance of being audited.”

The House of Representatives is expected to vote on the bill on Friday. President Joe Biden has said he will sign it into law.

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Reporting by Eric Beech; Editing by Bradley Perrett

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