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Yellen laid out her top priorities in the memo — a copy of which was obtained by FOX Business — which included clearing a backlog of unprocessed tax returns, modernizing IRS technology, improving taxpayer services and hiring "at least" 50,000 new employees over the next five years.
However, Republican lawmakers have been quick to criticize the new funding, warning that a stronger IRS could lead to increased audits on lower- and middle-income households.
That's because the IRS disproportionately targets low-income Americans when it conducts tax audits each year. In fact, households with less than $25,000 in earnings are five times as likely to be audited by the agency than everyone else, according to a recent analysis of tax data from fiscal year 2021 by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University.
The reason for that is a rise in what is known as "correspondence audits," meaning the IRS conducts reviews of tax returns via letters or phone calls rather than more complex face-to-face audits. Just a fraction — 100,000 of the 659,000 audits in 2021 — were conducted in person.
According to the Syracuse study, more than half of the correspondence audits initiated by the IRS last year — 54% — involved low-income workers with gross receipts of less than $25,000 who claimed the earned income tax credit, an anti-poverty measure.
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