Senator Crapo Introduces Bill to Block IRS Overreach on Data Collection

Posted by Ben Shuey on September 14, 2021

U.S. Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and U.S. House Ways and Means Republican Leader Kevin Brady (R-Texas) introduced the Tax Gap Reform and Internal Revenue Service (IRS) Enforcement Act to push back on overreaching data collection language proposed in Congress.

“In light of recent proposals to massively expand the IRS, with unprecedented amounts of mandatory funding, and the IRS’s continued abuses of taxpayer rights and privacy, any additional IRS funding and monitoring of Americans’ private finances must come with guardrails to help protect against abuses,” said Crapo.  “This legislation places important guardrails around IRS funding to protect taxpayers’ rights and privacy.”

Background:

Under the pretext of closing the “tax gap,” Democrats are seeking to increase IRS funding by a massive $80 billion over the next 10 years to expand “enforcement and compliance activities” at the IRS, and to create a “comprehensive financial account information reporting regime,” under which gross inflows and outflows of taxpayers’ financial accounts are reported by financial intermediaries to the IRS, effectively acting as IRS agents.

Key provisions of the Tax Gap Reform and IRS Enforcement Act:

• Tax Gap Reform: Requires timely, annually-updated information on tax gap estimates in coordination with the Joint Committee on Taxation.
• Taxpayer Protection: Prevents the IRS from targeting Americans for their political and ideological beliefs, codifies President Biden’s pledge to not increase audits of taxpayers making less than $400,000 per year, and prohibits the establishment of new bank reporting requirements.
• Smarter Enforcement: Requires the IRS to use existing data and tools to improve its corporate audit selection process and increase enforcement against high-income non-filers.
• Closes the Expertise Gap: Creates an IRS enforcement fellowship pilot program to assist with the agency’s most complex audits and case selection decisions.  Before hiring thousands of new agents, Congress should test the effectiveness of increasing expertise in a targeted way.

Posted in Advocacy on the Move.