The Secretary of the Treasury Janet L. Yellen lobbies Rep. Richard Neal, Democratic Chairman of Ways and Means Committee, to include the Biden administration's comprehensive proposal to strengthen the Internal Revenue Service in its 3-month spending program. $ 500 billion, arguing that more resources and increased powers to catch tax evaders are crucial for reduce the" tax gap ".
In a letter to Mr Neal, Ms Yellen urged lawmakers not to dilute a central element of the proposal, which would give the Internal Revenue Service visibility into taxpayer financial accounts through more requirements strict en reporting. Treasury officials say this will allow the agency to better crack down on the rich and corporations that don't pay what they owe.
Legislation released by House Democrats earlier this week included the $ 80 billion in additional IRS funding that the Biden administration had offered to help increase staffing and enforcement capacity. However, a separate proposal to adopt an "information reporting" regime was missing from the bill.
"When considering specific policy choices In designing an information reporting regime, it is important to ensure that the reporting regime is sufficiently comprehensive, so that tax evaders are not able to structure financial accounts for reporting purposes. avoid, "Ms. Yellen wrote. " Any suggestiThe claim that this whistleblowing regime will instead be used to target enforcement efforts on ordinary Americans is totally flawed. "
Critics of the proposal argued that giving the IRS more power to review taxpayer financial information is an invasion of privacy and said it could lead to frivolous audits for political reasons. The Biden administration insists that audit rates will not increase for taxpayers who earn less than $ 400,000.
In an addendum to the letter , Mark J. Mazur, Acting Assistant Treasury Secretary for Fiscal Policy, reiterated Treasury estimates that investment in line staff and new reporting powers could generate $ 700 billion dollars of government revenue on adecade. He suggested Congress might consider including a more modest reporting mechanism and warned that this would be less effective.
"Obviously this will reduce the estimated revenue generated. of the proposed reporting regime compared to the administration 's previous estimates, "Mazur wrote.
At a hearing on Wednesday, Mr. Neal said he received the letters and stressed the importance of strengthening tax law enforcement without adding new burdens to small businesses.
" We are in discussion with the administration on reporting proposals that target sophisticated tax avoidance and evasion without impacting the middle class and working Americans, "Neal said.