In a bid to crack down on tax cheats and bolster the U.S. Treasury, the Internal Revenue Service (IRS) has announced plans to ramp up audits. However, IRS Commissioner Danny Werfel clarified that not all taxpayers will face heightened scrutiny as the agency targets specific groups.

The IRS has received a substantial funding boost of $80 billion from the Inflation Reduction Act (IRA), signed into law by President Joe Biden in 2022. The aim of this funding was to revive an agency that has been grappling with depleted ranks, resulting in customer service issues, processing delays, and a decline in audit rates.

During a conference call with reporters, Werfel highlighted the positive impact of the IRA funding, stating that it allowed the IRS to answer more taxpayer calls and enhance its enforcement capabilities. As a result, the agency collected $520 million from wealthy individuals who had not filed their taxes or still owed money.

Werfel acknowledged the drastic changes in services brought about by the years of underfunding, emphasizing the strategic plan for the next three tax years. While the IRS will significantly increase audits, the focus will be on high-income earners and large corporations, rather than middle- and low-income individuals.

Werfel assured that there is no intention to initiate a new wave of audits for mom-and-pop businesses and individuals earning less than $400,000 annually, which covers the majority of U.S. taxpayers. Instead, the agency aims to send a message by concentrating its efforts on complex filers and high-wealth individuals earning over $10 million per year.

The IRS plans to address staffing challenges with the help of the IRA funding. The agency's workforce, which had dwindled to around 73,000 workers in 2019, has recently been boosted to approximately 90,000 full-time equivalent employees. The goal is to expand the workforce to about 102,500 employees over the coming years.

Werfel added that these hiring numbers would not even reach the record highs seen in the 1980s and early 1990s, dispelling any misconceptions about an overly inflated IRS workforce. He noted that many of the new hires are replacing retiring employees, debunking previous claims that the IRS would use the funding to add 87,000 new agents.

The increased funding and hiring efforts are aimed at strengthening the IRS's enforcement capabilities and improving customer service for taxpayers. The agency's strategic focus on audits of wealthy individuals and large corporations is seen as a clear signal of its commitment to combating tax evasion and ensuring compliance among high-earning entities.