Heritage Expert: Family and Small Business Taxpayer Protection Act Crucial to Reverse Damaging Funding of IRS Slush Fund

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Heritage Expert: Family and Small Business Taxpayer Protection Act Crucial to Reverse Damaging Funding of IRS Slush Fund

Jan 9, 2023 2 min read

WASHINGTON—The U.S. House is expected to soon vote on the Family and Small Business Taxpayer Protection Act, which would rescind roughly $72 billion from the new $80 billion IRS slush fund.  

Preston Brashers, senior policy analyst for tax policy in Heritage’s Hermann Center for the Federal Budget, released the following statement Monday in response: 

“It’s time for Washington to reverse the damage of the deceptively titled ‘Inflation Reduction Act’ and restore economic prosperity for Americans.  

 

“The Family and Small Business Taxpayer Protection Act acknowledges that it’s wrong to force American taxpayers to pay tens of billions of additional dollars to an agency that will turn around and use those funds for hundreds of thousands of additional audits and taxpayer shakedowns against the American people. The stepped-up enforcement funding in the Inflation Reduction Act would be used to impose painful audits to crack down on small businesses, gig economy workers, and hard-working American families. 

 

“The U.S. economy is sputtering, and Americans are struggling. The last thing we need is for more American families and small businesses to be bogged down under the weight of an IRS audit.” 

BACKGROUND: Effective Jan. 1, the Inflation Reduction Act gives $80 billion to the IRS. Varying estimates have suggested that the IRS could collect an additional $180 billion to $316 billion of taxes from Americans over the next 10 years because of the law, which was passed in 2022.  

The proposed Family and Small Business Taxpayer Protection Act would allow the IRS to keep the small share of new funds dedicated to improving taxpayer services and interactions with the IRS, including $3.2 billion dedicated to taxpayer services and $4.8 billion dedicated to business systems modernization. The $72 billion of rescinded funding in the act includes almost $46 billion dedicated to tax enforcement activities, such as audits, asset monitoring, criminal investigations, and litigation, and over $25 billion of IRS funding for operations support, such as offices and facilities, agency vehicles, and other agency-wide or headquarter-specific administrative activities and programs. 

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