More Money for I.R.S. Spurs Conspiracy Theories of ‘Shadow Army’

The agency will receive $80 billion to hire new agents, modernize technology and expand enforcement as part of the new climate, health and tax law.

The Internal Revenue Service building in Washington.Credit…Stefani Reynolds for The New York Times

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By Alan Rappeport and Tiffany Hsu

WASHINGTON — It has been called President Biden’s “shadow army,” described as a strike force to shake down small businesses with assault rifles and likened to a militia of auditors on search-and-destroy missions.

A decades-long Republican antipathy toward the Internal Revenue Service has reached a new level of enmity with the passage of a Democratic-backed bill that gives the agency $80 billion to beef up its ability to go after tax cheats. The legislation, which Mr. Biden signed into law this week, will allow the beleaguered agency to hire more than 80,000 employees, upgrade outdated technology systems and improve its ability to respond to taxpayers.

The agency’s staff is the same size today as it was in 1970, when it processed far fewer individual tax returns. Its enforcement staff has fallen more than 30 percent since 2010, and audits of millionaires have declined more than 70 percent. As of late June, millions of taxpayers were still waiting for the agency to process their 2021 tax returns.

But Republicans, who have long accused the I.R.S. of unfairly targeting conservatives, have seized on the law to fan unfounded conspiracy theories about the threat that mom-and-pop shops and middle-class Americans will face from an emboldened tax collector.

The scale and speed at which rumors about the agency have spread portend the political and logistical challenges that the Biden administration will confront as it embarks on the biggest overhaul of the I.R.S. since its inception. From Twitter and TikTok to newsletters and cable news, Republicans have embraced the notion that a bigger I.R.S. is poised to be weaponized against them, often distorting facts to make their points.

“This has become the lightning rod issue that’s really aggravated and activated conservative activists around the country,” said Stephen Moore, a conservative economist affiliated with FreedomWorks, a right-leaning organization that promotes small government. “I think it’s a total outrage.”

Mr. Moore, whose personal fight with the I.R.S. surfaced in 2019, has been leading a group of conservative activists in an attempt to “kill the bill” for nearly a year. Now that it has passed, Republicans have amped up their efforts to demonize the I.R.S., including misconstruing how big it will grow and what new employees will be doing.

“Stop Biden’s shadow army of 87,000 I.R.S. agents,” Senator Ted Cruz, the Texas Republican, blared on Twitter last week with an ominous ad recalling the agency’s targeting of Tea Party groups set against the sound of soldiers marching.

Senator Chuck Grassley of Iowa, a Republican on the Senate Finance Committee, warned Fox News viewers last week that the new I.R.S. agents, a small percentage of whom are allowed to carry firearms, might be coming with loaded “AK-15s” and “ready to shoot some small business person in Iowa.”

“I think they’re going after middle-class and small business people,” Mr. Grassley said. “With 87,000 additional employees, you can imagine what that harassment is going to be to middle-class Americans and our small business people.”

What’s in the Inflation Reduction Act

What’s in the Inflation Reduction Act

A substantive legislation. The $370 billion climate, tax and health care package that President Biden signed on Aug. 16 could have far-reaching effects on the environment and the economy. Here are some of the key provisions:

What’s in the Inflation Reduction Act

Auto industry. Until now, taxpayers could get up to $7,500 in tax credits for purchasing an electric vehicle, but there was a cap on how many cars from each manufacturer were eligible. The new law will eliminate this cap and extend the tax credit until 2032; used cars will also qualify for a credit of up to $4,000.

What’s in the Inflation Reduction Act

Energy industry. The legislation will provide billions of dollars in rebates for Americans who buy energy efficient and electric appliances. Companies will get tax credits for building new sources of emissions-free electricity. The package also includes $60 billion set aside to encourage clean energy manufacturing and penalties for methane emissions that exceed federal limits starting in 2024.

What’s in the Inflation Reduction Act

Health care. For the first time, Medicare will be allowed to negotiate with drugmakers on the price of some prescription medicines. The law also extends subsidies available under the Affordable Care Act, which were set to expire at the end of the year, for an additional three years.

What’s in the Inflation Reduction Act

Tax code. The law introduces a new 15 percent corporate minimum tax on the profits companies report to shareholders, applying to companies that report more than $1 billion in annual income but are able to use credits, deductions and other tax treatments to lower their effective tax rates. The legislation will bolster the I.R.S. with an investment of about $80 billion.

What’s in the Inflation Reduction Act

Low-income communities. The package includes over $60 billion in support of low-income communities and communities of color that are disproportionately burdened by climate change. Among the provisions are grants for zero-emissions technology and money to mitigate the negative effects of highways and other transportation facilities.

What’s in the Inflation Reduction Act

Fossil fuels industry. The legislation requires the federal government to auction off more public space for oil drilling and expand tax credits for coal and gas-burning plants that rely on carbon capture technology. These provisions are among those that were added to gain the support of Senator Joe Manchin III, Democrat of West Virginia.

What’s in the Inflation Reduction Act

West Virginia. The law is expected to bring big benefits to Mr. Manchin’s state, the nation’s second-largest producer of coal, making permanent a federal trust fund to support miners with black lung disease and offering new incentives to build wind and solar farms in areas where coal mines or coal plants have recently closed.

The I.R.S. is beefing up its staff to keep pace with the growth in taxpayers and to replace departing employees. The Biden administration expects that about 50,000 I.R.S. employees will retire within the next decade and that the agency will hire 87,000 new employees, bringing the overall size of the agency to around 120,000. The number of enforcement agents is expected to double to about 13,000 from 6,500 over the next decade.

And despite claims on social media that the I.R.S. hires will be heavily armed, a Treasury official said that just 1 percent of the new employees would be agents working in jobs that require carrying guns.

Still, the I.R.S. recently altered a job posting for criminal investigators amid the backlash, deleting that one of the role’s major duties was to “be willing to use deadly force, if necessary.” The amended ad now lists “Be legally allowed to carry a firearm” as a key requirement.

“The wording change on one web page followed continued misstatements and inaccuracies about I.R.S. employees carrying weapons,” said Khaalid Walls, an I.R.S. spokesman.

Republicans have been eager to fan fears about a scaled up I.R.S. ahead of midterm elections, which will determine which political party controls Congress.

Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, said this week that families making less than $75,000 would face 710,000 additional audits, suggesting that the Biden administration had lied about its pledge to not increase audit rates of taxpayers who make less than $400,000. Mr. Brady also suggested that the I.R.S. would have to target middle-income families to generate the kind of tax revenue that it has assumed the new law will generate.

“Middle-class families ought to be frightened,” he said on Fox News.

The 87,000 hires were described by users on social media platforms like Truth Social, the social media network started by former President Donald J. Trump, as “thugs” and “terrorists” and likened repeatedly to the Gestapo, the K.G.B. and even soldiers for the Roman Empire. Along with Mr. Cruz, the conservative commentator Dan Bongino and congressmen from Arizona, Texas and Louisiana took to calling the I.R.S. an “army.”

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