A House Budget Committee report claims that increasing IRS funding and modernizing the agency’s IT systems would have helped it distribute economic impact payments faster while also clamping down on wealthy tax dodgers.
The report, released by the committee’s Democratic staff October 1, made familiar claims that consistent underfunding of the IRS has hurt the agency’s tax-collecting ability as well as its modernization efforts.
“Due to a lack of resources, the IRS failed to audit nearly 900,000 wealthy individuals who owed nearly $46 billion in taxes but skipped out on filing — in just a three-year period,” Budget Committee Chair John A. Yarmuth, D-Ky., said in a statement.
The report points the finger at Republicans for starving the agency of funds since 2010. The report comes after revelations by The New York Times that President Trump paid only $750 in personal income tax in 2016 and 2017 and no income tax in 10 out of the previous 15 years.
Yarmuth said the article is evidence of two tax systems in the United States — one for working Americans and another for the wealthy to exploit. Recent Treasury Inspector General for Tax Administration reports have explained that the lack of funding prevents the agency from using more resources to go after wealthy tax avoiders.
The lack of funding has also hurt the IRS in distributing economic impact payments that were made available to taxpayers at the start of the pandemic. Under the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136), taxpayers making $75,000 or less were entitled to $1,200, with an additional $500 per child. The report said that “too many Americans in need were forced to grapple with delayed or erroneous [economic impact payments].”
Some recipients didn't receive the full amount they were owed, while others did not receive the child payments they were owed, the report said. Also, a portal set up by the IRS did not work for many taxpayers, and many more continue to wait for their checks, it added.