The federal government has become almost hopelessly weaponized. And the Left is only going to make it worse before they get out of power.
Now Biden moved to weaponize the IRS just before leaving office.
President Biden has introduced what many are calling a “potential marriage penalty” into the tax system through his directive for the IRS to ramp up audits of higher-income Americans, according to a report from the agency’s inspector general.
This move, which Biden touted as a way to target those earning $400,000 or more, has instead raised concerns about unfair treatment of married couples.
Biden secured tens of billions of dollars for the IRS to conduct these audits by assuring Congress that the focus would be on the wealthiest Americans.
However, the Treasury Department’s guidance treats all “households” the same, which means that a married couple each making $220,000 faces a higher likelihood of being audited than a single individual earning $390,000.
The IRS, under pressure to implement Biden’s audit orders and spend the allocated funds, is now grappling with the marriage penalty and other issues. The Treasury Inspector General for Tax Administration (TIGTA) warned that time is running out to resolve these problems.
“The IRS believes it has more time to work with the Treasury Department to finalize the audit coverage rate. However, given the complexity of developing the methodology and that FY 2025 is only a few months away, we believe the IRS needs to expedite finalizing its plan to comply with the Treasury Secretary’s Directive,” the inspector general stated.
Biden had promised that Americans earning less than $400,000 annually would not face increased audits, while those above that threshold would. But as the IRS struggles to define who falls into which category, the president’s pledge appears increasingly hollow.
The agency has expressed reluctance to use taxpayers’ reported total positive income (TPI) as a measure, fearing that some might manipulate their income to avoid crossing the $400,000 threshold.
“IRS officials stated that they are not following their standard approach to calculate audit coverage because they want to have the flexibility to audit taxpayers who might be incentivized to take advantage of higher audit rates of taxpayers with TPI at or above $400,000 by reporting incomes below that amount,” the inspector general reported.
The IRS has also chosen to use the 2018 tax year as a baseline for audit rates — a year when audits were “abnormally low” due to budget cuts and the pandemic’s impact on operations. This choice raises further questions about the agency’s approach under Biden’s directive.
Then there’s the issue of how married couples are treated under this new audit scheme. The inspector general pointed out that combining a married couple’s income could push them above the $400,000 threshold, even if individually they earn less.
“The potential marriage penalty exists because the threshold for married couple households is not double the amount allowed for single filer households,” the audit found, increasing their chances of being audited.
IRS officials claim they are bound by the Treasury Department’s 2022 guidelines, which do not distinguish between married and single filers.
The agency argues that maintaining a flat $400,000 threshold simplifies tracking progress, but critics see it as yet another flaw in Biden’s approach.
Grover Norquist, president of Americans for Tax Reform, criticized Biden’s handling of the situation.
“The president can make a phone call tomorrow and change this,” Norquist said. “They work for [Treasury Secretary Janet] Yellen. Yellen works for the president.” Norquist, a long-time opponent of Democratic tax policies, suggested that Biden’s vagueness is intentional, allowing him to target small-business owners without facing the full political backlash.
“Taxes don’t go away, and they do trickle down to hit everybody because that’s where the money is,” Norquist added, highlighting the broader impact of Biden’s tax policies.
The Inflation Reduction Act, passed by Democrats in 2022, poured $80 billion into the IRS, supposedly to improve taxpayer services and conduct more audits. While Republicans have clawed back some of that funding, about $57 billion remains available for the IRS’s modernization and enforcement efforts.
The Treasury Department did not respond to inquiries for this report, and IRS officials skirted the marriage penalty issue, instead pointing to their progress in following Biden’s directive to target high-income returns. The IRS has already collected $1 billion from millionaires with overdue taxes and is eyeing further action against tax avoiders, large corporations, and complex partnerships.
“At the same time, the IRS is taking steps to refine audit tools to avoid burdening those taxpayers who play by the rules and add more fairness to address audit disparities among lower-income taxpayers, including Earned Income Tax Credit recipients,” the agency said in a statement.
Audit rates have fallen significantly over the past decade, particularly for those making less than $25,000 and more than $10 million annually. But Biden’s push for more aggressive audits, coupled with the potential marriage penalty, raises serious concerns about fairness and the true impact of his tax policies on American families.
Stay tuned to the DC Daily Journal.
