IRS Launches Direct File Pilot Program: Concerns Raised About Targeting Low- and Middle-Income Americans
The Internal Revenue Service (IRS) has recently introduced its Direct File pilot program, in which the agency will prepare the taxes of select Americans making under $125,000. This initiative has raised concerns among former members of Congress, who believe that the IRS is once again focusing on low- and middle-income Americans instead of targeting wealthy tax evaders.
Over the years, the IRS has faced significant budget cuts from the legislative branch. Despite some modest increases in funding in recent years, the agency’s budget remains nearly 20% below its 2010 level, adjusted for inflation. In response to promises made by the IRS to go after wealthy tax evaders, Congress provided the agency with $80 billion in funding through the Inflation Reduction Act. However, with the launch of Direct File, the IRS seems to be shifting its focus back to Main Street.
A study conducted by Syracuse University on 2022 IRS tax audit data found that taxpayers in the lowest income bracket were five times more likely to face IRS audits than those in the highest income bracket. This disparity in audit rates is particularly impactful on the African-American community, with the IRS admitting that black taxpayers are audited at three to five times the rate of non-black taxpayers.
While the IRS claims that targeting Main Street is the easiest way to maximize revenue for the federal government, critics argue that Wall Street should be the primary focus. The richest Americans hide more than 20% of their earnings from the IRS, utilizing various tactics and resources not available to low- and middle-income families. The top 1% alone represents 28% of the nation’s total unpaid tax bill, compared to the top 5% who evade over $300 billion in taxes.
Instead of devoting more resources to Direct File, the IRS should follow through on its promises to Congress and target tax evasion by wealthy Americans. In the past, initiatives like the Offshore Voluntary Disclosure Program have successfully encouraged tax avoiders to disclose their hidden offshore assets in exchange for immunity from prosecution, resulting in billions of dollars in recovered revenue.
By scrapping Direct File and focusing on wealthy tax evaders, the IRS can begin to restore Main Street America’s faith in the agency and address one of the nation’s primary economic issues. This approach may not provide an overnight solution, but it is a necessary step towards reducing income and wealth inequality and ensuring a fairer tax system for all Americans.
Michael Arcuri, a former member of Congress from New York, emphasizes the importance of the IRS taking action against tax evasion by the wealthy. He argues that Main Street is not the problem; Wall Street is. The IRS has the opportunity to make a significant impact by targeting tax evaders and restoring trust in the agency.
Source: InsideSources.com
Original Story at www.miamiherald.com – 2023-08-27 21:32:08
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