Treasury Secretary Janet L. Yellen is pressuring Representative Richard Neal, Democratic Chairman of Ways and Means Committee, to include the Biden administration 's full proposal for bolster the Internal Revenue Service in its $ 3.5 trillion spending program, arguing that more resources and increased powers to catch tax cheats 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 Internal Revenue Service visibility into taxpayer financial accounts through more stringent reporting requirements. Treasury officials say this will allow the agency to better respondrhyme the rich and the corporations that don't pay what they owe.
Legislation released by House Democrats earlier this week included the $ 80 billion dollars in additional funding for the IRS 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 suggestion that this reporting regime will instead be used to target enforcement efforts sur ordinary Americans is totally wrong. "
Critics of the proposal have argued that giving the IRS more power to review Taxpayer financial information represents an invasion of privacy and have said it could lead to frivolous audits for political reasons. The Biden administration insists audit rates will not increase for taxpayers. taxpayers who earn less than $ 400,000.
In an addendum to the letter, Mark J. Mazur, Acting Assistant Treasury Secretary for Fiscal Policy, said reiterated Treasury estimates that investment in line staff and new reporting powers could generate $ 700 billion in government revenue over a decade. He suggested Congress might consider 'include a more modest reporting mechanisme and warned that this would be less efficient.
"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.