[Congressional Record Volume 169, Number 7 (Monday, January 9, 2023)]
[House]
[Pages H76-H94]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


           FAMILY AND SMALL BUSINESS TAXPAYER PROTECTION ACT

  Mr. SMITH of Nebraska. Mr. Speaker, pursuant to House Resolution 5, I 
call up the bill (H.R. 23) to rescind certain balances made available 
to the Internal Revenue Service, and ask for its immediate 
consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 5, the bill is 
considered read.
  The text of the bill is as follows:

                                H.R. 23

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Family and Small Business 
     Taxpayer Protection Act''.

     SEC. 2. RESCISSION OF CERTAIN BALANCES MADE AVAILABLE TO THE 
                   INTERNAL REVENUE SERVICE.

       The unobligated balances of amounts appropriated or 
     otherwise made available for activities of the Internal 
     Revenue Service by paragraphs (1)(A)(ii), (1)(A)(iii), 
     (1)(B), (2), (3), (4), and (5) of section 10301 of Public Law 
     117-169 (commonly known as the ``Inflation Reduction Act of 
     2022'') as of the date of the enactment of this Act are 
     rescinded.

  The SPEAKER pro tempore (Mr. Rouzer). The bill shall be debatable for 
1 hour, equally divided and controlled by the majority leader and the 
minority leader, or their respective designees.
  The gentleman from Nebraska (Mr. Smith) and the gentleman from 
Massachusetts (Mr. Neal) each will control 30 minutes.
  The Chair recognizes the gentleman from Nebraska.


                             General Leave

  Mr. SMITH of Nebraska. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days in which to revise and extend their 
remarks and include extraneous material on the bill currently under 
consideration.

[[Page H77]]

  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Nebraska?
  There was no objection.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, the process for considering our first bill of the 118th 
Congress reflects our commitment to Americans and an open legislative 
process.
  Congresswoman Michelle Steel and I first introduced this bill in 
September. Members were given more than 72 hours' notice prior to 
today's consideration.
  Mr. Speaker, 72 hours is more than enough time for Members to review 
this bill. In fact, it is two pages long and covers only one topic.
  If Members wish to vote on this bill, they must be present in the 
House Chamber because proxy voting is no longer an option.
  Now let's focus on what this bill does--it repeals the vast majority 
of the Internal Revenue Service funding Democrats enacted last year in 
order to pay for their Green New Deal.
  The primary purpose of that funding is hiring more auditors and 
support staff to vastly expand IRS's audit capacity. And not just 
audits on wealthy Americans. With that expanded capacity, IRS can bring 
in more revenue by auditing more middle- and lower-income families and 
more small businesses.
  Families and small businesses are struggling under the weight of 
record inflation and supply chain shortages. Small businesses are 
struggling to find workers at any wage.
  The overwhelming majority of Americans, about 85 percent, follow the 
law and pay their taxes. The last thing they need is more IRS agents 
knocking on doors to conduct audits.
  Yet, this IRS funding is part of the broad Biden administration 
strategy to tax and audit exponentially more Americans by looking into 
their bank accounts, requiring online payment services to report them 
when they split a dinner check with friends or pay their babysitter 
after a night out, and then target them using 87,000 new IRS employees.
  Americans deserve to know their government is working for them, not 
against them.
  Today, Mr. Speaker, you are going to hear Democrats claim there 
really won't be 87,000 new IRS employees. I imagine that they will say 
that new employees aren't going to target middle-class families and 
small businesses, and that Republicans don't care about IRS's customer 
service failings.
  Let's focus on the facts. When a Federal agency hires a new employee 
to replace one who retires, it does not increase the agency's head 
count. Yet, the Biden administration's own documents say they are 
increasing the head count by 87,000 over the next decade with these 
funds.
  Secretary Yellen's own instructions to IRS stated audit rates of 
families earning less than $400,000 should continue to be audited at 
historically similar rates. Under those instructions, 9 out of every 10 
new audits can target families earning less than $400,000.
  And because Republicans are committed to delivering a government that 
is accountable, this bill retains funding for customer service and IT 
modernization at IRS--despite the fact these accounts would be more 
appropriately addressed through regular appropriations--to ensure IRS 
has the resources to make much-needed improvement to taxpayer services.
  Mr. Speaker, there are numerous reasons to support this bill. It 
protects families and small businesses. It ensures agencies are funded 
appropriately. Most importantly, it stops autopilot funding for an out-
of-control agency that is perhaps most in need of reform. IRS needs to 
fix its customer service and return processing problems, not focus on 
auditing families and small businesses.
  Americans want an IRS that works for them, not against them.
  This bill is a great first step in that direction, and I reserve the 
balance of my time.
  Mr. NEAL. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in strong opposition to H.R. 23. My friend from 
Nebraska suggested a number of issues that we intend to challenge 
during the course of the next half hour, based upon the facts.
  This is theater tonight, Mr. Speaker. If we didn't get enough of the 
entertainment factor last week, we are going to proceed with it again 
this evening.
  Mr. Speaker, 87,000 IRS agents, let me debunk that right away. There 
are regular retirements of up to 8,000 a year, we are replacing them.
  How about the methodology of a computer upgrade, an investment in 
technology, more modeling, or should we have an IRS that operates the 
way Southwest Airlines did last week--to the dismay of the American 
family.
  This is a messaging bill, Mr. Speaker. The message that they choose 
to send--and let everybody understand this, the first bill that they 
have submitted, according to the Congressional Budget Office, adds $114 
billion to the Federal deficit. Legislation number one.
  They don't want a fairer tax administration. They think it is bad for 
some of their supporters. You know what they're attempting to do 
tonight is bad for middle-class families, it is bad for small 
businesses, who are then asked to pay more when the people at the top 
don't pay their fair share.
  Mr. Speaker, I include in the Record a letter from Charles Rossotti, 
the former IRS Commissioner.
                                                    March 1, 2020.
     Hon. Richard Neal,
     Chairman, Committee on Ways & Means,
     House of Representatives, Washington, DC.
       Dear Chairman Neal: I was IRS commissioner from 1997 to 
     2002. At the time, Congress passed a major bill that produced 
     some important, long-lasting reforms, including converting 
     the IRS to electronic filing and improving treatment of 
     taxpayers.
       I believe there is a major modernization opportunity today 
     that could efficiently recover a large amount of revenue. It 
     could gradually shrink the tax gap, while also easing burden 
     for millions of taxpayers who interact with the IRS.
       I am enclosing my article in Tax Notes, entitled ``Recover 
     $1.6 Trillion, Modernize Tax Compliance and Assistance,'' 
     which explains this opportunity.
       I would be happy to talk further to you or your staff about 
     this opportunity.
           Sincerely,
                                              Charles O. Rossotti,
     Commissioner of Internal Revenue, 1997-2002.
                                  ____


                  [From Tax Notes Federal, Mar. 2020]

     Recover $1.6 Trillion, Modernize Tax Compliance and Assistance

                        (By Charles O. Rossotti)


                             I. The Problem

       Last year the federal government failed to collect $574 
     billion of taxes that were legally due but not paid. That's 
     equal to more than half the budget deficit and, remarkably, 
     is equal to more than all the income taxes paid by 90 percent 
     of individual taxpayers.
       No business would tolerate such a gigantic financial loss, 
     so why is it accepted in the government?
       Columnist George Will captured a widespread view when he 
     recently wrote that ``shrinking the tax gap . . . is a 
     decades-old aspiration in Washington that would have been 
     accomplished already if it were possible.''
       This resignation in the face of massive revenue loss is a 
     self-fulfilling prophecy. The perception that nothing can be 
     done to reduce the loss rationalizes inaction, which allows 
     the loss to grow year after year.
       The tax gap has indeed been around for a long time, but 
     very little has been done to fix it.
       As the economy and the tax system have become bigger and 
     more complex, the resources provided to the IRS have been 
     regularly cut. These cuts have been made in small but steady 
     increments over the past 25 years. They have served in some 
     ways to validate complacency about the tax gap, which, while 
     growing in dollar amount, has remained relatively constant as 
     a percentage of taxes due. The implicit conclusion of many 
     observers is, ``If IRS budgets can be cut and the IRS 
     continues to maintain the status quo, maybe nothing the 
     IRS does really makes much difference.'' That conclusion 
     is demonstrably false.
       Most taxes continue to be collected without IRS 
     intervention for two reasons: First, most taxpayers have no 
     choice but to pay because their taxes are withheld or their 
     income is clearly reported; and second, about 85 percent of 
     the public has a positive attitude toward tax compliance.
       These factors still allow a substantial proportion of 
     taxpayers to fail to pay what they owe, producing an ever-
     increasing tax gap.
       In the limited number of cases in which the IRS audits 
     returns, it directly collects additional revenue that exceeds 
     the cost of enforcement. A recent study by Natasha Sarin and 
     Lawrence Summers showed that revenue collected from audits 
     declined proportionately as audits were reduced. Taking a 
     broader, top-down view, IRS enforcement

[[Page H78]]

     activities in fiscal 2017 produced $56 billion in revenue, of 
     which $12 billion was from auditing, while the entire IRS 
     enforcement budget was $4.7 billion.
       Although traditional IRS enforcement activities do produce 
     revenue that reduces the tax gap, these results are not 
     entirely inconsistent with the perception that there is no 
     way to make a big reduction in the gap. Again taking a top-
     down view, if all of IRS auditing produces $12 billion of 
     revenue, doubling the audit rate would reduce the current tax 
     gap by only about 2 percent if the revenue increase were 
     proportionate. While an extra $12 billion of revenue per year 
     would be considered a big gain on almost any scale, it is 
     only a dent in the massive amount of the tax gap.
       Although not a justification for failing to do more with 
     traditional means to recover taxes from those who don't pay, 
     these facts emphasize the importance of new approaches to 
     shrink the tax gap. This report proposes a program, Tax 
     Compliance and Assistance 2020 (TCA 2020), to put the tax gap 
     on a reliably declining path, recovering an estimated $1.6 
     trillion over the first 10 years while also improving service 
     to all taxpayers.


                           ii. a new approach

       TCA 2020 proposes two major reforms: adding third-party 
     reporting of some income that is not now reported, and using 
     new technology to transform the IRS compliance and assistance 
     process.
       Because the biggest part of the tax gap is from income 
     that's not reported to the IRS by third parties, some 
     additional reporting will help identify the missing income. 
     However, the IRS today cannot use all the information it 
     already receives, and significant areas of noncompliance are 
     barely addressed, so more reporting alone will not solve the 
     problem.
       New technology will make it possible for the IRS to rapidly 
     assess all returns and sources of information, identify 
     likely areas of noncompliance, and assist in efficient 
     follow-up. It will gradually transform the IRS process for 
     compliance and taxpayer assistance.
       This new approach will improve the way millions of 
     taxpayers interact with the IRS, and no additional reporting 
     would be required for individuals who receive modest income 
     from sources like home businesses or driving.
       This proposal does not require the invention of new 
     technology, but rather application of new methods already 
     used in government and industry, including methods used on a 
     limited scale in the IRS today.
       This proposal is based on more than 50 years of business 
     and government experience that I gained as a company founder, 
     CEO, director of 20 public and private companies, IRS 
     commissioner, and member of President George W. Bush's tax 
     reform panel, and through service on nonprofit boards and 
     government committees. Almost all of these ideas have been 
     previously advanced in some way by others, but TCA 2020 is my 
     own integration of those ideas with practical ways to 
     implement them. I was ably assisted in this work by Michael 
     Udell of the District Economics Group and other experts in 
     tax and technology.


                   iii. summary of estimated results

       If these proposals were implemented starting in 2020, we 
     estimate the results would be as shown in the Estimated 
     Results table. The method and details are provided in 
     Appendix A, Exhibit 1, to this report, which is available on 
     our website.
       As the new proposals are implemented, the gain would 
     steadily increase, reducing the unmitigated tax gap by about 
     29 percent in the 10th year and gaining a 10-year total of 
     about $1.6 trillion. In subsequent years, the gain would 
     continue to grow both in dollars and as a percentage of the 
     unmitigated gap.
       This new approach to address the tax gap would not require 
     a proportional increase in the IRS budget. We estimate that 
     the revenue gained would be 16 to 33 times the additional 
     cost to implement it.


                     iv. understanding the tax gap

       The tax gap is not a result of a taxpayer's judgment or 
     interpretation of the tax code. It's a matter of many 
     taxpayers not paying all of what they legally owe, and the 
     government allowing that noncompliance to continue.
       The tax gap therefore constitutes a large loss of revenue 
     that's not intended by the tax code. It is intrinsically 
     unfair, because it's a financial advantage that only 
     noncompliant taxpayers receive.
       An IRS study of tax returns filed from 2011 to 2013 found 
     that the net tax gap per year was $381 billion. This is the 
     amount that should have been paid under the law but wasn't, 
     even after IRS enforcement efforts. The tax gap grew to an 
     estimated $574 billion in 2019, applying the same ratios of 
     income as in the last IRS study.
       This huge revenue loss doesn't even include revenue lost 
     from large corporations that skillfully exploit the many 
     arcane provisions of the tax code to reduce their taxes but 
     usually remain in technical compliance. Only 5 percent of the 
     IRS estimate of the tax gap was from large corporations.
       In the years studied, after IRS enforcement, about 14 
     percent of the amount that taxpayers initially failed to pay 
     was eventually collected. The remaining 86 percent represents 
     an opportunity to increase revenue solely from taxpayers who 
     should have paid anyway.
       Unfortunately, the fraction of revenue recovered from the 
     tax gap has remained low and stable for many years. Although 
     some revenue could be gained simply by doing more auditing, 
     substantial progress will require new methods, which are 
     possible today only because of advances in technology.
     A. Unreported Income by Individuals
       The largest source of the tax gap is from individual 
     taxpayers who fail to report all the income they receive from 
     a business they own, rather than income they receive from 
     others as wages, interest, or dividends.
       The key difference between these sources of income is that 
     income reported to both the IRS and the taxpayer by payers 
     such as an employer or bank is easy for the taxpayer to 
     report accurately and for the IRS to verify.
       The stark difference in compliance accuracy depending on 
     the degree of independent reporting is shown in Figure 1 from 
     the IRS compliance study.
       As also shown in the figure, it's not necessary to have 
     perfectly accurate reporting to make a big difference in 
     compliance accuracy. Of income that is subject to little or 
     no reporting, 55 percent is not reported, while only 17 
     percent of income that is subject to some reporting is not 
     reported.
       Nor is it necessary for the IRS to increase reporting about 
     taxpayers who earn small amounts of business income from 
     occasional business activities like babysitting and home 
     businesses.
       Sole proprietor income constitutes the majority of income 
     in the low-visibility category. Taxpayers with less than 
     $25,000 in sole proprietor business income comprise about 70 
     percent of the returns but represent only 14 percent of 
     reported income and a somewhat greater proportion of the tax 
     gap from underreported income.
       TCA 2020 recommends that these small-income taxpayers be 
     exempt from any increased reporting requirements.
       Taxpayers with more than $25,000 of business income would 
     be required to report to their bank and on their returns the 
     bank account or accounts in which their business income is 
     deposited. Taxpayers who had only income that's already 
     reported to the IRS by employers, banks, or customers (on 
     documents such as the familiar Form W-2 or Form 1099) 
     wouldn't have to do anything except check a box on their 
     return.
       The banks that were designated by taxpayers as receiving 
     their business income would be required at year-end to 
     provide the taxpayer and the IRS with a summary report of 
     deposits received and disbursements made in these accounts, 
     including those from credit card payments. This would be a 
     report similar to the Form W-2.
       The taxpayer would attach a schedule to the tax return 
     reconciling the total amounts reported by the bank with the 
     income and expenses reported on the tax return. For example, 
     if the cash received in the bank account was greater than the 
     amount reported on the return, the schedule would itemize the 
     difference. The IRS would design a form for this 
     reconciliation schedule that any bookkeeper could complete.
       This process wouldn't require taxpayers to change anything 
     about their banking arrangements and wouldn't restrict any 
     banking transactions. Taxpayers wouldn't be required to 
     isolate their business bank accounts from their personal 
     accounts, although many do have separate accounts, and others 
     might choose to do so out of convenience.
       Instituting this increased bank and taxpayer reporting 
     would alone improve the accuracy with which taxpayers report 
     business income. Past experience shows that when additional 
     specific data is required, taxpayers improve their own 
     reporting.
       For example, in 1988, when taxpayers were first required to 
     list the Social Security numbers of dependents claimed as 
     exemptions, more than 42 million fewer dependent exemptions 
     were claimed than in 1986, on just over 100 million returns. 
     This equates to almost half a claim dropped per return filed, 
     before the IRS did anything with the data.
       Additional reporting, while an essential element, is only 
     one part of the TCA 2020 program. The most significant gains 
     would be made possible only by a much more effective IRS 
     compliance process enabled by modern technology that applies 
     newer analytical techniques to larger volumes of data.
       With additional bank and taxpayer data, together with data 
     already collected from third parties, the IRS could more 
     readily detect which returns likely had significant 
     unreported income and follow up with more precisely targeted 
     taxpayer communication or auditing. In fact, much of the 
     follow-up could also be automated. This modernized process is 
     described in more detail later.
       These reforms would also increase the amount of income 
     recovered where some limited reporting already occurs, such 
     as for capital gains and partnership income reported on 
     individual returns.
       We estimate that if this proposal had been fully effective 
     in 2019, it would have generated approximately $97 billion in 
     revenue. However, as discussed later, we estimate that its 
     effectiveness would phase up over a 10-year period.
     B. Passthrough Businesses
       Unlike most corporations, many private businesses do not 
     pay tax as a business. Instead, their owners pay tax on the 
     income of their business on their individual returns. 
     Businesses organized in this way are called passthroughs 
     because the business income is passed through to the owners.
       The IRS designates three categories of passthrough 
     businesses: sole proprietorships,

[[Page H79]]

     partnerships, and S corporations. Sole proprietorships report 
     their business income on a schedule attached to the owner's 
     individual return, while S corporations and partnerships are 
     legal entities that file separate returns.
       The amount of business income produced by passthrough 
     entities has steadily and vastly increased in the last 40 
     years, as shown in Figure 2: Twenty-five years ago, 
     corporations, which pay tax directly, accounted for almost 
     all the income produced by significant-sized businesses. 
     Today passthrough entities account for almost as much income 
     as corporations.

  Mr. NEAL. Mr. Speaker, he points out in the opening paragraph of a 
tax notes special. By the way, those of us in the tax world know what 
tax notes means. He said that last year, this would be 2021, the 
Federal Government failed to collect $574 billion of taxes that were 
legally due but not paid. That is equal to more than most of the 
Federal deficit. If they want to reduce the Federal tax deficit, we 
should do a better job with tax compliance, which, after all, is the 
basis of a representative democracy.
  Mr. Speaker, 86 percent of the American people pay their taxes every 
year on time. Do you know why? Because they get paid in wages and it 
comes from withholding taxes, that is what it is about.
  The American people are wise to what is being presented here tonight. 
We live in a two-tier tax system. Wage earners follow the rules. 
Wealthy billionaires, they get to skirt their responsibilities. That is 
what we are being asked to vote on tonight.
  IRS funding has been stagnant, staffing levels have dropped. Have you 
tried getting an IRS office on the phone?
  How many times will we continue to let those at the top get away 
without paying their share?
  We lose out on--just think of it again--almost $600 billion a year in 
unpaid taxes. It is very sophisticated tax planning that is done by 
high-priced attorneys and CPAs. It is estimated that this could be up 
to $7 trillion because we score items over the course of 10 years.
  What might this funding pay for?
  How about Social Security? How about Medicare? How about a strong 
military? How about a child tax credit that could be expanded? How 
about universal paid family and medical leave? How about bringing down 
healthcare costs?
  The audit rates amongst millionaires have declined by 70 percent 
since 2010. Let me repeat that for anybody who didn't get that. The 
audit rate for millionaires has declined by 70 percent since 2010.
  Low-income workers who receive the earned income tax credit, they are 
audited more now than taxpayers who are making over $1 million a year.
  All we are asking for is fairness in the distribution of the 
responsibilities as to how we pay for government. There is a different 
set of standards across the land now. And to point that out to you once 
again--what is our commitment to America?
  It should be based on a fair tax system that collects what is due 
from those who ought to be paying.
  The former IRS Commissioner, a Republican, Charles Rettig, he pointed 
out that he was fully in support of the legislation that we were 
offering because the IRS is continually out-maneuvered and out-gunned 
by sophisticated efforts from tax lawyers and CPAs.
  We have to put American families over the politics in the 
distribution of theater that we are witnessing tonight. See through 
this legislation and vote ``no.''
  Mr. Speaker, I reserve the balance of my time.
  Mr. SMITH of Nebraska. Mr. Speaker, I include in the Record an 
excerpt from a 2021 Biden administration proposal called ``The American 
Families Plan Tax Compliance Agenda'' that asks for $80 billion in IRS 
funding and clearly shows a plan for 86,852 new hires.

          [From the U.S. Department of the Treasury, May 2021]

            The American Families Plan Tax Compliance Agenda


                        Restoring IRS Resources

       The first step in the President's efforts to restore IRS 
     enforcement capability is a sustained, multi-year commitment 
     to rebuilding the IRS. This involves spending nearly $80 
     billion on IRS priorities over the course of the decade 
     including hiring new specialized enforcement staff, 
     modernizing antiquated information technology, and investing 
     in meaningful taxpayer service--including the implementation 
     of the newly expanded credits aimed at providing support to 
     American families. Importantly, the additional resources will 
     go toward enforcement against those with the highest incomes, 
     and audit rates will not rise relative to recent years for 
     those earning less than $400,000 in actual income.
       The President's proposal includes two components: a 
     dedicated stream of mandatory funds ($72.5 billion over a 
     decade) and a program integrity allocation ($6.7 billion over 
     a decade). These mechanisms provide for a sustained, multi-
     year commitment to revitalizing the IRS that will give the 
     agency the certainty it needs to rebuild.
       The IRS proposal includes year-by-year estimates of the 
     additional resources that will be directed toward the agency 
     as well as the specific activities that these resources would 
     support. The design ensures that the IRS is able to absorb 
     and usefully deploy additional resources over the entire 10-
     year horizon and keeps budget growth manageable at around 10 
     percent per year.

  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the gentleman 
from North Carolina (Mr. Murphy), a member of the Ways and Means 
Committee.
  Mr. MURPHY. Mr. Speaker, I rise today in support of the Family and 
Small Business Taxpayer Protection Act, one of the first legislative 
acts of the new Republican majority.

                              {time}  1930

  Main Street America has suffered 2 years too many of Democrats' one-
party rule. Inflation continues to hover at record highs, and small 
businesses continue to struggle.
  The last thing that these small businesses can afford right now is 
87,000 new IRS agents not only targeting their enterprises but 
targeting their livelihoods. With 11 million tax returns still awaiting 
IRS action, the IRS should be focusing on doing their job rather than 
weaponizing their agency.
  This isn't new. The Democrats have used the IRS and the Tax Code as a 
weapon before and are attempting to do it again. The Family and Small 
Business Taxpayer Protection Act rescinds new IRS funding intended to 
target middle-class families.
  This cannot wait.
  Mr. Speaker, I urge passage of this bill so our small businesses can 
thrive absent any fear of IRS agents knocking at their door.
  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentleman from Texas 
(Mr. Doggett), who intends to talk about the tax gap.
  Mr. DOGGETT. Mr. Speaker, this first Republican bill should be known 
as the protect Donald Trump and his tax cheating cronies act.
  After years of obstructing access to Donald Trump's tax returns, we 
learned how little he paid toward the cost of our national security and 
how poorly the Trump Internal Revenue Service enforced our tax laws.
  Each year the richest 1 percent in our country avoid paying an 
incredible $160 billion of the taxes they owe. This crime wave of 
Trump-style tax cheating is made possible by Republican insistence on 
defunding the revenue police. Over the past decade, audit rates for 
corporations are down by half and the ultrarich by three-fourths.
  Republican claimed interest in law and order seems to vanish when it 
comes to tax fraud by the wealthiest few. And their very first bill 
adds $114 billion to our deficit. Yes, Trump may have been 
indispensable last week, but this is outrageous. When those, like 
Trump, don't pay what they owe, then the tax burden gets shifted to 
small businesses and to families across the country.
  Reject the Republican drive to defund.
  Mr. SMITH of Nebraska. Mr. Speaker, I include in the Record a 
Republican Ways and Means Committee release that explains the 
Congressional Budget Office's determination that it expects over $20 
billion in revenue to come from the increased audits on taxpayers--that 
means families and small businesses making less than $400,000.

             [From waysandmeans.house.gov, August 12, 2022]

CBO: New IRS Audits Will Grab at Least $20B from Lower- & Middle-Income 
                                Families

       Key Point: At least $20 billion of the revenue Democrats 
     hope to collect from taxpayers with a supercharged IRS would 
     come from lower- and middle-income earners and small 
     businesses, according to a new analysis

[[Page H80]]

     by the nonpartisan congressional scorekeeper. That's in 
     addition to existing audits of these income levels.
       Explanation: Last weekend, all 50 Senate Democrats voted 
     against an amendment offered by Senate Finance Republican 
     Leader Mike Crapo (R-ID) that would have protected lower- and 
     middle-income American taxpayers against new audits by the 
     IRS.
       The Congressional Budget Office (CBO) confirms that had 
     this amendment passed and lower- and middle-income taxpayers 
     been protected, revenue in Democrats' bill would have been 
     reduced by at least $20 billion--confirming that at least $20 
     billion of the $124 billion in new revenue expected by a 
     supercharged IRS will be coming from higher audits on low- 
     and middle-income Americans. This will be in addition to 
     existing audits on these income levels.
       From CBO:
       ``CBO has not completed a point estimate of this amendment 
     but the preliminary assessment indicates that amendment 5404 
     would reduce the 'non-scorable' revenues resulting from the 
     provisions of section 10301 by at least $20 billion over the 
     FY2022-FY2031 period.''
       Additional Background:
       Lower- and middle-income earning Americans are the primary 
     target in Democrats' bill:
       A previous Congressional Budget Office analysis makes clear 
     that under this plan, audit rates will ``rise for all 
     taxayers'' and the policy ``would return audit rates to the 
     levels of about 10 years ago.''
       The Joint Committee on Taxation, Congress's official tax 
     scorekeeper, says that from 78 percent to 90 percent of the 
     money raised from under-reported income would likely come 
     from those making less than $200,000 a year. Nearly half of 
     the audits would hit Americans making $75,000 per year or 
     less and only 4 percent to 9 percent would come from those 
     making more than $500,000.
       Democrats voted against guardrails preventing audits for 
     middle-income earners, instead using non-binding legislative 
     language that would do nothing to protect taxpayers from 
     agency abuse.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the 
gentlewoman from Texas (Ms. Van Duyne).
  Ms. VAN DUYNE. Mr. Speaker, I rise today in full support of H.R. 23 
which rescinds the additional funding for the already inflated IRS. I 
think we can all agree that the last thing Americans need right now is 
a government who is actively working against them.
  One of the most outrageous provisions in the Democrats' so-called 
Inflation Reduction Act was giving the IRS 72 billion taxpayer dollars 
to hire 87,000 additional agents whose job would be to stalk 
transactions of everyday Americans and attack small businesses.
  Middle-class Americans and the small businesses that fuel our economy 
have been unable to catch a break over the last 2 years. That ends 
today. There is simply no reasonable rationale to make the IRS larger 
than the Pentagon, State Department, FBI, and Border Control together.
  If we are adding an additional 87,000 agents, why don't we send them 
to the southern border to help our border agents who are already 
overwhelmed and understaffed?
  I stand with my colleagues today in support of H.R. 23 to block the 
intrusive and unnecessary 87,000 new IRS agents. Americans deserve a 
government that will work for them, and stopping this funding is a 
first step in the right direction.
  Mr. NEAL. Mr. Speaker, I include in the Record the Statement of the 
Administration Policy opposing H.R. 23.

                   Statement of Administration Policy


  H.R. 23--To rescind certain balances made available to the Internal 
                            Revenue Service

       The Administration strongly opposes H.R. 23, to rescind 
     certain balances made available to the Internal Revenue 
     Service (IRS). The bill would rescind funding passed in the 
     Inflation Reduction Act (IRA) that enables the IRS to crack 
     down on large corporations and high-income people who cheat 
     on their taxes and evade the taxes that they owe under the 
     law.
       This reckless bill would increase the deficit by nearly 
     $115 billion over 10 years per an estimate by the 
     Congressional Budget Office by enabling wealthy tax cheats to 
     engage in additional tax fraud and avoidance. To be clear, 
     the Treasury Secretary has already directed that none of the 
     additional IRS resources be used to increase audit rates 
     relative to historical levels for small businesses or 
     households with incomes below $400,000. Far from protecting 
     middle-class families or small businesses, H.R. 23 protects 
     wealthy tax cheats at the expense of honest, middle-class 
     taxpayers. Each year the top one percent hides about 20 
     percent of their income from the government so they can get 
     away with not paying any tax on it. That means that working 
     people--who report 99 percent of their income to the IRS--pay 
     a larger share of collected taxes than they should. Not only 
     does it shift the tax burden from the wealthy to the middle-
     class, it would also make it harder for middle-class families 
     and small businesses to get timely tax refunds and other 
     important services from the IRS, by rescinding billions in 
     funding for IRS information technology and operations.
       With their first economic legislation of the new Congress, 
     House Republicans are making clear that their top economic 
     priority is to allow the rich and multi-billion dollar 
     corporations to skip out on their taxes, while making life 
     harder for ordinary, middle-class families that pay the taxes 
     they owe. That's their agenda; not lowering costs or cutting 
     taxes for hard working Americans--as President Biden has 
     consistently advocated.
       If the President were presented with H.R. 23--or any other 
     bill that enables the wealthiest Americans and largest 
     corporations to cheat on their taxes, while honest and hard-
     working Americans are left to pay the tab--he would veto it.
  Mr. NEAL. Mr. Speaker, I include in the Record a CBO score for this 
bill that is showing that it will add $114 billion to the Federal 
deficit over the next 10 years.


  ESTIMATED BUDGETARY EFFECTS OF H.R. 23, THE FAMILY AND SMALL BUSINESS TAXPAYER PROTECTION ACT, AS POSTED ON THE WEBSITE OF THE CLERK OF THE HOUSE OF REPRESENTATIVES ON JANUARY 9, 2023 AS AN
                                                                         ITEM THAT MAY BE CONSIDERED PURSUANT TO A RULE
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 By fiscal year, millions of dollars--
                                     -----------------------------------------------------------------------------------------------------------------------------------------------------------
                                          2023         2024         2025         2026         2027         2028         2029         2030         2031         2032      2023-2027    2023-2032
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Decreases (-) in Direct Spending
 
Total Changes in Direct Spending
    Budget Authority................      -71,473            0            0            0            0            0            0            0            0            0      -71,473      -71,473
    Outlays.........................       -2,359       -2,835       -4,124       -5,589       -7,252       -9,249      -11,423      -14,027      -14,605            0      -22,159      -71,463
 
                                                                                    Decreases (-) in Revenues
 
Total Changes in Revenues...........       -1,645       -6,186      -12,506      -17,394      -21,574      -25,416      -28,983      -31,441      -31,879       -8,814      -59,305     -185,838
 
                                                    Net Increase or Decrease (-) in the Deficit from Changes in Direct Spending and Revenues
 
Net Effect on the Deficit...........         -714        3,351        8,382       11,805       14,322       16,167       17,560       17,414       17,274        8,814       37,146      114,375
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays and revenues
  that are subject to those procedures are shown above.
The Congressional Budget Office adheres to laws and Congressional rules concerning the federal budget and to a set of principles (called the Scorekeeping Guidelines) created by the Congress.
  Those principles guide how the House and Senate Budget Committees, the Congressional Budget Office, and the Office of Management and Budget attribute budgetary effects to legislation, with
  the goal of promoting consistent treatment of estimated effects among those agencies. (For more information on those guidelines, see Congressional Budget Office, CBO Explains Budgetary
  Scorekeeping Guidelines, January 2021, www.cbo.gov/publication/56507.)
When a provision in an authorization bill provides funding for administrative or program management activities, such as when the IRS receives additional funding for administrative activities,
  spending of those amounts can result in increases in receipts. Guideline 14, however, directs scorekeepers to exclude those increases when estimating the budgetary effects of proposals that
  would provide additional mandatory funding for such activities.
Guideline 14 was adopted in part to avert cases in which possible, but uncertain, receipts were used to offset near-term increases in spending resulting from the same bill. That guideline is
  asymmetrical, however. That is, even though increased receipts cannot be credited to a bill that would increase administrative funding, estimated receipt losses that might result from a
  decrease in such funding are included in the estimated budgetary effects.
H.R. 23 would rescind unobligated funds provided by paragraphs (1)(A)(ii), (1)(A)(iii), (1)(B), (2), (3), (4), and (5) of section 10301 of Public Law 117-169. CBO estimates that the bill would
  decrease outlays by $71 billion and decrease receipts by $186 billion over the 2023-2032 period. Both of those effects are included in accordance with Guideline 14.

  Mr. NEAL. Mr. Speaker, I include in the Record an op-ed piece from 
the former IRS Commissioner Charles Rettig, a Republican, titled: ``IRS 
sets the record straight: We're going after tax evaders, not honest 
Americans.''

                  [From Yahoo! Finance, Aug. 25, 2022]

IRS Sets the Record Straight: We're Going After Tax Evaders, Not Honest 
                            Americans: Op-Ed

                         (By Charles P. Rettig)

       As the nation's tax administrator, the IRS plays a unique 
     role in our nation. It can be a difficult job. After all, 
     does anyone really like paying taxes? Of course not. But 
     they're essential to fund the roads we drive on, the schools 
     our children attend, support our military and so much more. 
     Unfortunately, given the nature of this work and historical 
     stereotypes, the IRS is often perceived as an easy target for 
     mischaracterizations of what

[[Page H81]]

     IRS employees do--and that's exactly what's happened in 
     recent weeks.
       The recent debate over providing badly needed funding to 
     the IRS is filled with outright false suggestions about what 
     the agency and our hardworking employees do--as well as how 
     the additional resources will be handled.
       The bottom line is this: These resources are absolutely not 
     about increasing audit scrutiny on small business or middle-
     income Americans. The investment of these important resources 
     is designed to support honest, compliant taxpayers. Our 
     investment is designed around a Treasury directive that audit 
     rates do not rise relative to recent years for households 
     making under $400,000.
       We all want a fair and impartial system where everyone 
     contributes their fair share, no more and certainly no less. 
     A robust, visible tax enforcement effort focused on high-end 
     tax evaders and those supporting them is a priority. 
     Underpayments by tax evaders shift the burden of operating 
     our great country onto honest, hard-working Americans who 
     follow the law. With this new law, honest taxpayers will see 
     badly needed, meaningful service improvements at the IRS. The 
     IRS should be able to answer the phones and process 
     information--including tax returns--in a timely manner. 
     Enhanced IT systems and taxpayer services will mean that 
     honest taxpayers will be better able to comply with the tax 
     laws, ultimately resulting in a lower--yes, lower--likelihood 
     of being audited and a reduced burden on them.
       To set the record straight on this important legislation 
     and dispel any lingering misperceptions, here are some key 
     facts to keep in mind:
       False Statement: The IRS is hiring 87,000 armed special 
     agents to harass taxpayers.
       Reality: Absolutely false. The majority of new hires the 
     IRS makes will be those who answer the phones, work on 
     processing individual tax returns or go after high-end 
     taxpayers or corporations who are avoiding their taxes. Less 
     than 1 percent of new hires will be in our IRS Criminal 
     Investigation (IRS-CI) area, which currently has a total of 
     about 2,100 special agents and is currently hiring about 300 
     more.
       These CI special agents investigate criminal tax violations 
     typically related to money laundering, Bank Secrecy, National 
     Security and National Defense matters. They have been 
     involved in dismantling terrorist financing efforts and 
     criminal cartels as well as eliminating child exploitation 
     operations in the Dark Net that led to the arrests of 
     hundreds of people throughout the world. They do not perform 
     civil tax administrative functions such as audits of tax 
     returns. They are law enforcement officers, and every 
     American should be extremely proud they are on our team.
       False Statement: All IRS employees--and those being hired 
     under the new legislation--will carry firearms.
       Reality: Again, absolutely false. More than 97 percent of 
     IRS employees do not carry weapons. This includes key civil-
     side enforcement personnel, including revenue agents, 
     examiners and others involved in audits and compliance work. 
     Less than 3 percent of IRS employees--expressly limited to 
     Criminal Investigation special agents--carry firearms. IRS 
     Criminal Investigation oversees the entirety of the work 
     related to criminal violations of the tax law and other 
     financial crimes. This is consistent with other federal law 
     enforcement agencies.
       False Statement: The additional funding will be used to 
     hire more auditors to ``shake down'' average taxpayers.
       Reality: False. Wage-earning taxpayers like firefighters, 
     construction workers, teachers and police officers are among 
     the most compliant taxpayers, given that their incomes come 
     from Forms W-2 and 1099. These resources are absolutely not 
     about increasing audit scrutiny on small businesses or 
     middle-income Americans. Instead, the additional resources 
     will also be focused on large corporate and high net-worth 
     taxpayers to enforce laws already on the books that the IRS 
     does not have enough resources to pursue.
       False Statement: The new legislation will be a massive 
     overnight expansion of the IRS.
       Reality: False. This funding--which will be spread over 10 
     years--will add employees over time as we modernize our 
     operations with meaningful technological enhancements. In 
     addition, the IRS has one of the oldest workforces in 
     government, and staffing has been in a deep decline for many 
     years. More than 50,000 employees will retire in the next few 
     years, leaving the foundation of the tax system that the 
     nation relies on at risk. We've been losing 10,000 employees 
     a year.
       Overall, current IRS staffing is far below historical 
     norms. In 1992, the IRS had 117,000 employees--38,000 more 
     than today. Back then, the agency was dealing with fewer 
     taxpayers; the U.S. population has grown almost 30 percent 
     since 1992.
       False Statement: This new funding will allow overreach by 
     the IRS, putting agents on every street corner and prying 
     into people's personal financial lives.
       Reality: False. This funding will allow the IRS to better 
     serve the nation's taxpayers--and ultimately meet the 
     critical needs of our country. Our employees care and, like 
     others in government, take an oath to support our country. We 
     take pride in hiring veterans, people with disabilities and 
     people from all walks of life and from every corner of our 
     country. Many of our employees, including myself, are members 
     of a military family. And all of our employees reflect the 
     taxpayers we serve.
       I am an extremely proud American, a member of a proud 
     military family, and simply will not accept baseless, harmful 
     assertions against the interests of our country and the 
     proud, hard-working employees of the IRS.
       Everyone should know this about IRS employees: We care, a 
     lot, about this country and you.

  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentleman from 
California (Mr. Thompson), who is a much-valued member of the Ways and 
Means Committee.
  Mr. THOMPSON of California. Mr. Speaker, I rise in opposition to this 
misguided, expensive, and unpaid for legislation.
  For years, my colleagues on the other side of the aisle have done 
everything they can to demonize the IRS. But here is the reality: When 
the IRS doesn't have the funding it needs, then two very bad things 
happen. The very wealthy tax cheats are able to avoid paying their fair 
share; and two, our constituents who need help from the IRS face 
unnecessary and destructive delays in getting that help.
  The majority can't criticize the IRS for its performance while 
simultaneously fighting to cut the IRS budget.
  Despite what my colleagues on the other side of the aisle would lead 
you to believe, Mr. Speaker, there aren't 87,000 storm troopers funded 
in this bill who are going to bang down your door. That is pure and 
utter nonsense.
  Taxes are the price we pay to live in a civilized society. They are a 
fundamental part of our civic responsibility to one another.
  This bill is a bad idea, and I encourage all my colleagues to vote 
``no''.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the gentleman 
from Kansas (Mr. Estes).
  Mr. ESTES. Mr. Speaker, I am pleased today to rise in support of 
commonsense legislation that puts the American people ahead of padding 
the coffers of the IRS.
  It wasn't long ago that Washington was under one-party rule. This 
Chamber was recently under the leadership of the Democratic Party that 
worked to give D.C. bureaucrats more power and wanted to hire an army 
of IRS agents to harass and audit my constituents while ignoring the 
need for more border agents to address the crisis at our southern 
border.
  Congressman Smith's legislation eliminates the devastating IRS 
provision that Democrats snuck into their so-called Inflation Reduction 
Act by rescinding the funding to this D.C. agency.
  The facts are that middle- and lower-income people are audited more 
by IRS agents by design of the IRS.
  The Kansans I represent need relief from high gas prices and rampant 
inflation caused by the current administration and one-party rule. My 
constituents don't need a supercharged IRS that will investigate their 
transactions between friends and sic 87,000 new agents on them.
  This bill, as the first bill that the new Congress addresses, puts 
our priorities on full display. Republicans are ready to restore our 
Nation and hold government accountable.
  Mr. Speaker, I urge my colleagues to support this crucial 
legislation.
  Mr. NEAL. Mr. Speaker, I thank the gentleman from Kansas, my friend. 
He just pointed out that the people at the bottom are audited more than 
the people at the top. That is precisely the point that we are 
attempting to make here during the course of the next few minutes.
  Mr. Speaker, I yield 1 minute to the distinguished gentleman from 
Maryland (Mr. Hoyer), who is the former majority leader.
  Mr. HOYER. Mr. Speaker, I thank the gentleman for yielding and adopt 
all the remarks he made in his opening statement.
  This debate about IRS lends itself to being the most dishonest and 
demagogic rhetoric that I have seen in the Congress at any point in 
time.
  I rise as the former chairman of the Treasury-Postal Committee, now 
the Financial Services and General Government Committee to which I will 
return having left the majority leader's spot.
  This bill is a bad bill. Every small American taxpayer ought to be 
for this bill because this bill will make sure that others pay their 
fair share as they do.

[[Page H82]]

  That is the issue. They are paying their fair share, as the chairman 
noted, because we take it out of their salary. But the people who get 
it through dividends and capital gains, et cetera, et cetera, aha, they 
have got the lawyers, the accountants, and the people who can tell them 
how not to pay their fair share.
  This is a bill against small business. This is a bill against the 
small taxpayer. This is against paying your fair share.
  Mr. SMITH of Nebraska. Mr. Speaker, I include in the Record a 
Republican Ways and Means Committee release explaining that Senate 
Democrats voted down an amendment that would prevent increased audits 
on taxpayers making less than $400,000 a year and House Democrats 
refuse to take up a bill that would do the same.

              [From waysandmeans.house.gov, Aug. 17, 2022]

         Democrats Fail To Protect Middle Class From IRS Audits

       Democrats voted against guardrails that would have 
     protected lower- and middle-income taxpayers from more audits 
     as a result of supercharging the IRS with 87,000 new agents.
       Instead, they hope you'll just ``take their word for it'' 
     that the IRS won't target American families who are living 
     paycheck to paycheck. Various news outlets have circulated 
     these claims as facts, but the bill text says otherwise, 
     Reason Magazine's Matt Welch reports.
       Democrats claim they won't target lower- and middle- income 
     earners with their expansion of the IRS by 87,000 agents . . 
     .
       ``. . . top Democrats have been busy escalating their 
     already implausible claims that goosing the IRS enforcement 
     budget by 69 percent over a decade, hiring 87,000 additional 
     new staffers at an agency that currently employs 79,000, and 
     nabbing an estimated extra $124 billion in tax revenue will 
     miraculously not bring any percentage increase in audits 
     performed on Americans earning less than $400,000 a year.''
       . . . but the nonpartisan Congressional Budget Office 
     predicts boosted IRS funding will increase audits for all 
     taxpayers . . .
       ``CBO Director Phillip L. Swagel estimated that boosting 
     IRS funding by $80 billion would increase tax revenues by 
     $200 billion (the number would later rise to $207 billion, 
     before settling at $204 billion), adding that `the proposal . 
     . . would return audit rates to the levels of about 10 years 
     ago; the rate would rise for all taxpayers' (italics mine), 
     though `higher-income taxpayers would face the largest 
     increase.' ''
       . . . and Democrats voted against Republican amendments 
     preventing lower income earners from being targeted by higher 
     audits.
       ``In the final IRA bill, in fact, $45.7 billion is 
     earmarked for `enforcement,' and $25.3 billion goes to 
     `operations support.' There is no reason to conclude from 
     those dollar amounts that the number of resulting audits will 
     be less than originally projected.''
       Many ``fact checkers'' have refused to verify claims by 
     Democrats:
       ``As Liz Wolfe has reported repeatedly in the pages of 
     Reason, none of these assurances live in the text of the 
     Inflation Reduction Act (IRA) itself. One Republican 
     amendment ``to prevent the use of additional Internal Revenue 
     Service Funds from being used for audits of taxpayers with 
     taxable incomes below $400,000'' was voted down on party 
     lines. You'll just have to take Democrats' word for it. 
     ``That's good enough for many news organizations, who have 
     been coughing up ``fact-checks'' aimed not at the 
     demonstrable veracity of White House promises about 
     significant legislation impacting literally all adult 
     Americans but at the hyperbole of Republican criticism 
     thereof.''
       Democrats will raise audits on the middle class under the 
     guise of going after the tax gap.
       ``The fact remains that you can't close the tax gap without 
     greater enforcement on the poor and that enforcement on the 
     poor is considerably less expensive.''
       ``It is true that Yellen has freshly directed the IRS to 
     not increase the audit rate of under-$400,000s. And it's also 
     true that there's no structural enforcement mechanism 
     preventing the agency from continuing to go after low-hanging 
     fruit to meet revenue targets.''
       Only $3.2 billion of the $80 billion total goes towards 
     improving services for taxpayers.
       ``. . . just $3.2 billion of the $80 billion is earmarked 
     for customer service, producing a mere 9 percent increase 
     over the previous baseline. If the agency is bad at answering 
     phone calls--and it's bad at answering phone calls--a 9 
     percent bump seems inadequate to the task.''

  Mr. SMITH of Nebraska. Mr. Speaker, I yield 3 minutes to the 
gentleman from Missouri (Mr. Smith).
  Mr. SMITH of Missouri. Mr. Speaker, I thank the gentleman from 
Nebraska for yielding.
  House Republicans made a promise to the American people to fight for 
working-class families. And we made a promise that our first order of 
business under a new Republican majority would be to repeal the $80 
billion Democrats gave the IRS to hire 87,000 new agents to target 
American working-class families.
  We are delivering on that promise today.
  This bill rescinds the IRS funds in the Inflation Reduction Act--a 
law that does nothing to combat inflation but everything to empower an 
agency that has targeted Americans. They have leaked taxpayer 
information, and under the Biden administration, they threatened to 
snoop into the bank accounts of millions of middle-class families.
  We know this because President Biden wrote such a proposal into his 
first budget as part of his agenda to expand the power of the IRS and 
shovel billions more to this troubled agency.
  At that time, we asked the Joint Committee on Taxation how many 
Americans might be subject to such a scheme to spy into their bank 
accounts. The JCT said that up to 134 million taxpayers could be 
targeted.
  So much for just going after the millionaires and the billionaires 
that our Democrat colleagues like to talk about.
  While the Biden administration--including Treasury Secretary Yellen--
has tried to dismiss concerns over how middle-class Americans would be 
targeted by the IRS, under the Democrats' $80 billion infusion of cash, 
the Congressional Budget Office has affirmed undoubtedly families 
making less than $400,000 per year would be subjected to increased 
enforcement and, yes, audits by the IRS.
  But of course this would be the case when you realize that more than 
half of the $80 billion Democrats gave the IRS is earmarked for 
enforcement.
  The IRS does not need a raise. It needs a reckoning. And what starts 
today with rescinding this $80 billion continues through rigorous IRS 
oversight that Democrats ignored under their one-party rule.
  Taxpayers deserve true oversight for an agency that leaked the tax 
returns of thousands of American taxpayers at the same time the White 
House was calling for tax increases on those individuals. We are 
talking about an agency with a history of targeting conservatives with 
woefully underperforming customer service and whose own commissioner 
under Obama called this $80 billion more than three times the amount of 
money the agency actually needed.
  House Republicans are ready to provide oversight and accountability, 
and that starts today with ending this $80 billion pay raise.
  Mr. NEAL. Mr. Speaker, let me congratulate Mr. Smith, incidentally, 
on his recent elevation to become the chairman of the Ways and Means 
Committee. We look forward to a productive session during the next 
couple of years.
  Mr. Speaker, I include into the Record a blog post by the Center on 
Budget and Policy Priorities summarizing the fact check that has 
repeatedly debunked the false claim that we just heard a few seconds 
ago, that the IRS is going to hire 87,000 new agents immediately.

     [From Center on Budget and Policy Priorities, January 9, 2023]

  House GOP's First Bill: A Misleading Gambit To Protect Interests of 
                           Wealthy Tax Cheats

                            (By Chuck Marr)

       House Republicans have announced that their first 
     legislative priority is to rescind nearly all of the 
     Inflation Reduction Act's $80 billion in ten-year funding for 
     the IRS, while repeating falsehoods and inflammatory rhetoric 
     about how that funding will be used. While the Republicans 
     have launched a campaign about a false ``army'' of 87,000 
     agents, the debate should focus on one accurate and alarming 
     number: the IRS has 2,284 fewer skilled auditors to handle 
     the sophisticated returns of wealthy taxpayers than it did in 
     1954. The decade-long, House Republican-driven budget cuts 
     have created dysfunction at the IRS, where relatively few 
     millionaires are now audited. If House Republicans succeed in 
     rolling back this critically needed funding and maintaining 
     this dysfunction, the IRS would be woefully understaffed, 
     hindering its ability to administer the tax code and collect 
     legally owed taxes--particularly from high-income and high-
     wealth taxpayers. On behalf of honest taxpayers, policymakers 
     should reject the House Republican effort to protect wealthy 
     tax cheats.
       The IRS workforce is composed of civilian public servants, 
     such as accountants and customer service representatives, who 
     collect nearly all the federal revenue to fund

[[Page H83]]

     our government, from Medicare and Social Security to our 
     armed forces. Its skilled auditors, also known as revenue 
     agents, are highly trained to handle sophisticated tax 
     returns of wealthy people and multinational corporations. All 
     of these IRS employees perform a core function of government, 
     are central to the workings of our democracy, and work on 
     behalf of honest taxpayers.
       Republican IRS critics, however, have constructed a 
     narrative around the IRS workforce becoming an ``army'' of 
     87,000 ``armed agents'' whose enemies are ``hardworking 
     American families and small businesses.'' This rhetoric is 
     false and dangerous.
       Fact checkers have repeatedly debunked the 87,000 figure, 
     which comes from a prior Treasury estimate that it would use 
     new funding to hire 87,000 total staff over the next ten 
     years, including IRS employees in all departments, not just 
     skilled auditors. These are people who answer phones, process 
     returns, program computers, as well as a fraction--albeit an 
     important one--who audit complex tax returns.
       The House GOP campaign ignores the reality of today's IRS--
     which has resulted from the sharp budget cuts that 
     Republicans have pushed since 2010--as well as the harm that 
     would flow from rescinding much of the Inflation Reduction 
     Act's new IRS funding. The upcoming debate needs to cut 
     through the obfuscation of the House Republican campaign and 
     focus on honest and pertinent numbers.
       Consider, in 2021, the IRS had 8,321 skilled auditors. 
     That's 40 percent fewer than the agency had in 2010, the year 
     before House Republicans were in the majority and began 
     driving the last decade of steep IRS budget cuts.
       Moreover, it's 2,284 fewer revenue agents than the IRS had 
     in 1954--not a typo. The last time the IRS had fewer revenue 
     agents than it has today was in 1953. Today's economy is 
     seven times larger than it was in 1953 and our population has 
     more than doubled since then. Today's tax returns of wealthy 
     people and large multinationals are more complex and global, 
     which take more time for auditors to review.
       As a result of these budget cuts and fewer skilled 
     auditors, audit rates have plummeted for wealthy individuals 
     and large corporations.
       For the largest corporations (those with more than $1 
     billion in assets), the audit rate fell by more than half 
     between 2010 and 2017. For millionaires, the audit rate fell 
     by roughly 77 percent over the same period. Preliminary audit 
     data for 2018 and 2019 suggest that the audit rate may have 
     declined over 90 percent between 2010 and 2019.
       House Republicans want to scare people with their false 
     claims about how the IRS would use the new resources. But the 
     reality is that, today, the IRS skilled audit staff is 2,284 
     smaller than in 1954, only a tiny fraction of millionaires is 
     audited, and large multinationals can hire large squads of 
     lawyers to easily overwhelm the resources of the IRS. One 
     only needs to skim President Trump's tax returns, the 
     indictment of convicted tax cheat Paul Manafort, and a 
     ProPublica investigation of how Facebook outgunned the IRS to 
     grasp the resources necessary to be serious about enforcing 
     our tax laws and how reckless it would be to keep the number 
     of skilled auditors at 1950s levels, as the House Republicans 
     would do.
       Honest taxpayers and business owners deserve better. They 
     deserve an IRS that processes their tax returns and tax 
     refunds efficiently, answers the phone when they call with 
     questions, and ensures that the wealthy and profitable 
     corporations are paying the taxes they legally owe.
       A key element of a healthy, functioning democracy is a 
     transparent tax system that is fairly enforced so that people 
     and corporations pay what they owe and the well-heeled and 
     powerful cannot flout their responsibility to pay their 
     taxes.
       Efforts to protect wealthy tax cheats and purposely 
     undermine the IRS's ability to enforce tax laws are anti-
     democratic and should be resoundingly rejected.

  Mr. NEAL. Mr. Speaker, I include in the Record a FactCheck.org 
article confirming that not all of the 87,000 people who will be hired 
are going to work on enforcement.

                  [From FactCheck.org, Aug. 18, 2022]

IRS Will Target `High-Income' Tax Evaders with New Funding, Contrary to 
                           Social Media Posts

                            (By Brea Jones)


                               QUICK TAKE

       The Inflation Reduction Act includes $79 billion for the 
     IRS. Social media posts misleadingly claim the IRS will now 
     hire ``87,000 new agents'' to investigate average citizens. 
     But most new hires will provide customer services, and 
     enforcement efforts will be aimed at ``high-income and 
     corporate tax evaders,'' a Treasury Department spokesperson 
     said.


                               FULL STORY

       President Joe Biden signed the Inflation Reduction Act--a 
     climate, health care and tax package--into law on Aug. 16.
       The legislation includes roughly $79 billion for the IRS 
     over 10 years. The nonpartisan Congressional Budget Office 
     projects that the enhanced IRS enforcement funded by the law 
     will generate an additional $204 billion in revenue over 10 
     years. That represents additional taxes that are owed under 
     existing laws, but which go unpaid.
       Treasury Department officials say not all new hires will 
     work on enforcement and increased revenues won't come from 
     middle-income earners. Treasury Secretary Janet L. Yellen 
     directed IRS Commissioner Charles P. Rettig not to use the 
     new funding to increase enforcement of taxpayers earning less 
     than $400,000. The IRS is a bureau of the Treasury 
     Department.
       ``Specifically, I direct that any additional resources--
     including any new personnel or auditors that are hired--shall 
     not be used to increase the share of small businesses or 
     households below the $400,000 threshold that are audited 
     relative to historical levels,'' Yellen wrote in an Aug. 10 
     letter to Rettig. ``This means that, contrary to the 
     misinformation from opponents of this legislation, small 
     business or households earning $400,000 per year or less will 
     not see an increase in the chances that they are audited.''
       But Republican members of Congress and social media users 
     have spread the false claim that the new law will be used to 
     hire ``87,000 new IRS agents.''
       Sen. Ted Cruz, in an interview on Fox News that was posted 
     to Facebook, got it doubly wrong when he claimed that 
     ``87,000 new IRS agents'' will be going after small 
     businesses and regular Americans.
       ``And, by the way, these IRS agents aren't there to go 
     after billionaires,'' Cruz said. ``They're there to go after 
     you. They're there to go after your small business.''
       But, as we will explain later, not all of the new hires 
     will be ``agents.'' There's a big difference between IRS 
     agents, such as revenue agents and special agents, and the 
     workers who make up the bulk of the IRS staff. And, as we 
     said, the Treasury Department has directed the IRS not to 
     focus on small businesses and those earning less than 
     $400,000.
       Some versions of the claim suggest that the 87,000 new 
     ``agents'' will be armed--but, as we've written before, only 
     ``special agents'' who investigate criminal violations of the 
     tax code are authorized to carry firearms.
       Rep. Matt Gaetz took it one step further, calling it 
     ``bizarre'' that the IRS bought $700,000 worth of ammunition 
     between March and June 1 of this year. He suggested that the 
     purchases are part of a ``broader effort'' to get ammunition 
     off the market. But, as we will detail later, the purchases 
     this year are in line with past years, according to 
     government data.
       Some of the claims about the IRS on social media were tied 
     to an unrelated event--the FBI search of former President 
     Donald Trump's Mar-a-Lago home in Florida.
       ``The IRS is coming for you. The DOJ is coming for you. The 
     FBI is coming for you. No one is safe from political 
     punishment in Joe Biden's America,'' the official Twitter 
     account for the House Judiciary Committee Republicans 
     tweeted.
       But Rettig, the IRS commissioner, wrote in a letter to 
     lawmakers on Aug. 4 that the resources obtained with the 
     funding from the Inflation Reduction Act ``are absolutely not 
     about increasing audit scrutiny on small businesses or 
     middle-income Americans.''
       ``Other resources will be invested in employees and IT 
     systems that will allow us to better serve all taxpayers, 
     including small businesses and middle-income taxpayers,'' 
     Rettig said.


               Funds for Customer Service and Enforcement

       A Treasury Department report from May 2021 estimated that a 
     similar $80 billion investment proposed in Biden's American 
     Families Plan would have allowed the IRS to modernize and 
     restore the ``IRS enforcement capability'' in several ways--
     including by hiring 86,852 full-time employees. That's where 
     the claim about hiring ``87,000 new agents'' apparently comes 
     from.
       The 2021 report said the $80 billion investment to restore 
     the IRS would be broken down into two components: ``a 
     dedicated stream of mandatory funds ($72.5 billion over a 
     decade) and a program integrity allocation ($6.7 billion over 
     a decade).''
       The $6.7 billion program integrity allocation will be used 
     for ``the hiring and retention of at least 5,000 new 
     enforcement personnel,'' the 2021 report said. ``The 
     mandatory funds are allocated over a 10-year horizon. They 
     provide enforcement resources, including a significant 
     investment in revitalizing the IRS's examination of large 
     corporations, partnerships, and global high-wealth and high-
     income individuals.''
       Over the past decade, the IRS has lost 40 percent of its 
     ``complex revenue agents''--agents who handle complicated tax 
     returns of large businesses and corporations and go after 
     high-end tax evaders--as its budget has been gutted, 
     according to a Treasury Department spokesperson. ``Today, the 
     IRS has the same number of IRS revenue agents for complex 
     work as it had in WWII,'' the spokesperson told us in an 
     email.
       Over the next five years, the IRS is expecting to lose up 
     to 52,000 employees to attrition, the Treasury Department 
     spokesperson told us in a phone interview. Most of the new 
     hires will replace the outgoing employees and will be on the 
     service side of the IRS.
       ``The majority of hires made with these resources fill 
     positions of the 50,000 IRS employees who are on the verge of 
     retirement. Of the net new hires, the majority are hired to 
     improve customer services--from upgrading IT to answering 
     phone calls,'' the Treasury Department spokesperson said.
       The IRS might net about 30,000 new hires, as a result of 
     the number of retirements and new funding. But the IRS hasn't 
     yet released estimates for how many new employees the

[[Page H84]]

     agency could hire with funding from the Inflation Reduction 
     Act. The IRS is expected to release the final numbers and 
     breakdown in the coming months.
       ``The resources to modernize the IRS will be used to 
     improve taxpayer services--from answering the phones to 
     improving IT systems--and to crack down on high-income and 
     corporate tax evaders who cost the American people hundreds 
     of billions of dollars each year,'' the spokesperson said. 
     ``The majority of new employees will replace the standard 
     level of staff departures over the next few years and will be 
     hired to improve taxpayer services. The agency will 'also 
     bring on experienced auditors who can take on corporate and 
     high-end tax evaders, without increasing audit rates relative 
     to historical norms for people earning under $400,000 each 
     year.''
       A White House spokesperson told us in an email, ``both 
     Treasury Secretary Yellen and the IRS Commissioner have been 
     explicit that these funds will be used for the wealthiest 
     taxpayers and not those making less than $400,000 per year. 
     These resources will improve technology and customer service, 
     which will make it less likely that honest taxpayers get 
     audited.''


                Spending on Ammunition and Armed Agents

       Gaetz, a Republican from Florida, raised concerns in June 
     that the IRS spent $700,000 on ammunition from March to June 
     of this year, and he introduced the Disarm the IRS Act in 
     July.
       Gaetz described the ammunition acquisition as ``bizarre'' 
     in a recent interview. Others have also echoed the claim.
       But that's not an unusual amount of money for the IRS to 
     spend on ammunition and is on par with what has been spent in 
     previous years for the IRS Criminal Investigation division, 
     which was established in 1919.
       IRS Criminal Investigation is the sixth-largest federal law 
     enforcement agency in the U.S. But it's a small unit of the 
     IRS overall, less than 3 percent of its total workforce, 
     according to the Treasury Department spokesperson.
       The IRS Criminal Investigation division doesn't perform 
     routine IRS audits on average Americans.
       ``The bulk of IRS's tax administration work is done by 
     civilian auditors and revenue collectors,'' Justin Cole, a 
     spokesman for the IRS Criminal Investigation division, told 
     us in an email. ``IRS Criminal Investigation oversees the 
     entirety of the work related to criminal violations of the 
     tax law and other financial crimes.''
       The division investigates cases related to money 
     laundering, cybercrime, bank secrecy, national security, 
     national defense and narcotics organizations--a large reason 
     for the need for firearms and training. The division is 
     famously known for the arrest of American gangster AL Copone. 
     More recently, the division has been involved in the task 
     force that is tracking the assets of Russian oligarchs.
       ``In order to carry out their daily duties, which include 
     search warrants and arrests, CI special agents carry 
     firearms,'' Cole said.
       Using usaspending.gov, the official source of U.S. spending 
     data and the site used by Gaetz, we found that the IRS has 
     spent $816,248.90 so far in the fiscal year 2022 for ``duty 
     ammunition'' from Vista Outdoor Sales. That's a little less 
     than last fiscal year ($842,989,60) and slightly more than in 
     fiscal 2020 ($761,265,40). (All amounts are ``total 
     obligations,'' as of Aug. 18.)
       The majority of the recent $725,460.10 spending went for 
     handgun ammunition and equals about 2,545 cases of 
     ammunition--``just enough for Special Agent handgun 
     qualifications,'' Cole said. ``CI purchases the minimum 
     amount of ammunition necessary to cover training and firearms 
     qualifications for its law enforcement employees.''
       The IRS spent an average of $712,500 on ammunition for 
     fiscal years 2010 to 2017, according to a 2018 report to 
     Congress by the Government Accountability Office on firearms 
     and ammunition purchases by federal law enforcement agencies.
       ``There are about 3,000 employees in [the IRS Criminal 
     Investigation division], 2,100 of which are special agents 
     and the remaining professional staff. Only special agents 
     carry firearms,'' Cole said.
       In 2021, there were 2,046 special agents, who ``are among 
     the most highly trained financial investigators in the 
     world,'' according to the 2021 annual report.
       The number of special agents in the division hasn't changed 
     much in five years, according to the division's annual 
     reports. In 2017, there were 2,159 special agents. But the 
     number of special agents has declined substantially since 
     2009, when the bureau had 2,725--as we noted 12 years ago 
     while addressing a misleading claim about the IRS hiring 
     ``16,500 new agents.'' That's a 33 percent decrease from 2009 
     to 2021.
       New special agents complete six months of training, 
     including firearms training.
       The IRS is not the only government agency that purchases 
     guns and ammunition for enforcement officers. The 2018 GAO 
     report lists several other agencies that make those 
     purchases, such as the Food and Drug Administration, the 
     National Institutes of Health and the Veterans Health 
     Administration.

  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentleman from 
Connecticut (Mr. Larson) who is a distinguished member of the Ways and 
Means Committee.
  Mr. LARSON of Connecticut. Mr. Speaker, I rise to associate myself 
with the remarks of the distinguished gentleman from Massachusetts.
  I think he used the right words when he talked about theater.
  Isn't it long overdue that we are honest with the American people 
about what this is about?
  Come on, Mr. Speaker, you can't really believe that what you are 
proposing here isn't shielding the wealthiest people in this Nation and 
corporations.
  People at Augie & Ray's in East Hartford are not fooled by this, and 
they understand what the agenda is. You place us further in debt and 
leave us with little else to do to help the people who need it the 
most.
  What is this a guise for?
  Cutting what you call entitlements.
  What people at Augie & Ray's know are earned benefits that they pay 
for every single week out of their paycheck where they pay their taxes 
as well.
  The SPEAKER pro tempore. Members are reminded to direct their remarks 
to Chair.

                              {time}  1945

  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the gentleman 
from Illinois (Mr. LaHood), a member of the Ways and Means Committee.
  Mr. LaHOOD. Mr. Speaker, I rise today in strong support of the Family 
and Small Business Taxpayer Protection Act.
  This bill defends American taxpayers against an unchecked, 
supercharged IRS and prioritizes customer service and tax return 
processing, two of the agency's most important functions.
  Included in the Democrats' reckless Inflation Reduction Act this past 
summer, the IRS received an additional $80 billion in funding, with 
over half directed toward enforcement.
  What is worse, the Democrats' bill failed to include any safeguards 
to protect low- and middle-income taxpayers from being unfairly 
targeted for tax audits.
  While the IRS continues to beef up their audit division, the agency 
still has 3.7 million unprocessed tax returns and a total of 11.1 
million returns awaiting action. This is simply unacceptable. The IRS 
should focus on processing these returns, along with addressing the 
awful level of customer service currently available to taxpayers.
  Law-abiding families and small businesses in Illinois need their tax 
returns processed and phone calls answered, not more IRS agents 
knocking on their doors with burdensome audits.
  Mr. Speaker, I urge the adoption of this bill.
  Mr. NEAL. Mr. Speaker, that is precisely the point that we have 
attempted to make. Customer service is not occurring because the IRS 
has been cut by 30 percent over the last 15 years.
  Mr. Speaker, I include in the Record a letter from the IRS 
Commissioner to the House of Representatives confirming that the IRS 
will not raise audit rates on those making under $400,000 a year.

                                       Department of the Treasury,


                                     Internal Revenue Service,

                                   Washington, DC, August 4, 2022.
       Dear Member of the House of Representatives, It has been 
     the greatest honor of my professional life to spend the last 
     four years at the helm of the IRS. I am struck each day by 
     the commitment of dedicated IRS employees to helping American 
     families. And our employees have done all that without the 
     tools to do so effectively. For too long, the agency has not 
     had the resources that it needs to ensure the tax laws are 
     enforced fairly and that Americans receive the level and 
     quality of service they deserve. We are the greatest country 
     in the world, yet the agency that touches more Americans than 
     any other continually struggles to receive sufficient 
     resources to fulfill its important mission.
       The resources in the reconciliation package will get us 
     back to historical norms in areas of challenge for the 
     agency--large corporate and global high-net-worth taxpayers--
     as well as new areas like pass-through entities and 
     multinational taxpayers with international tax issues, where 
     we need sophisticated, specialized teams in place that are 
     able to unpack complex structures and identify noncompliance.
       These resources are absolutely not about increasing audit 
     scrutiny on small businesses or middle-income Americans. As 
     we've been planning, our investment of these enforcement 
     resources is designed around the Department of the Treasury's 
     directive that audit rates will not rise relative to recent 
     years for households making under $400,000. Other resources 
     will be invested in

[[Page H85]]

     employees and IT systems that will allow us to better serve 
     all taxpayers, including small businesses and middle-income 
     taxpayers. Enhanced IT systems and taxpayer service will 
     actually mean that honest taxpayers will be better able to 
     comply with the tax laws, resulting in a lower likelihood of 
     being audited and a reduced burden on them.
       Large corporate and high-net-worth taxpayers often engage 
     teams of sophisticated representatives who pursue unsettled 
     or sometimes questionable interpretations of tax law. The 
     integrity and fairness of our tax administrative system 
     relies upon the ability of our agency to maintain a strong, 
     visible, robust enforcement presence directed to these and 
     other similarly situated taxpayers when they are 
     noncompliant. These important efforts also support honest 
     taxpayers who voluntarily comply with their filing and 
     reporting requirements.
       The IRS has fewer front-line, experienced examiners in the 
     field than at any time since World War II, and fewer 
     employees than at any time since the 1970s. Advances in 
     technology have been helpful but have not kept pace with the 
     ever-increasing responsibilities and challenges facing the 
     IRS. As a result, the IRS has for too long been unable to 
     pursue meaningful, impactful examinations of large corporate 
     and high-networth taxpayers to ensure they are paying their 
     fair share. This creates a direct revenue loss from evaders 
     and lessens the potential to deter others from pursuing a 
     similar path of noncompliance. Every American should support 
     a fair and impartial system of tax administration supported 
     by an appropriately resourced tax administrator. In fact, the 
     continued success of our country depends, in part, upon the 
     success of the agency in appropriately, fairly and 
     impartially enforcing the tax laws and in providing 
     meaningful, impactful services to every American.
       As an extremely proud American, I'm grateful for your 
     support of the IRS and our dedicated employees. I cannot be 
     forceful enough in emphasizing that these resources will be 
     transformative for the agency and for American taxpayers. I 
     am available to meet with you at your convenience to discuss 
     the foregoing.
           Thank you,
                                                Charles P. Rettig.

  Mr. NEAL. Mr. Speaker, I include in the Record a letter from 
Secretary Yellen to the IRS Commissioner, directing the IRS not to use 
any additional funding to increase audits on small businesses and 
households earning less than $400,000 a year.
                                       Department of the Treasury,


                                    Secretary of the Treasury,

                                  Washington, DC, August 10, 2022.
     Charles P. Rettig,
     Commissioner, Internal Revenue Service,
     Washington, DC.
       Dear Commissioner: The Inflation Reduction Act includes 
     much-needed funding for the IRS to improve taxpayer service, 
     modernize outdated technological infrastructure, and increase 
     equity in the tax system by enforcing the tax laws against 
     those high-earners, large corporations, and complex 
     partnerships who today do not pay what they owe.
       These crucial investments have been a focus of the Biden 
     Administration since the President's first day in office, and 
     I was heartened to see the legislation pass the Senate this 
     weekend.
       Notwithstanding the changes that arose because of 
     Republican challenges during the Byrd process, I write today 
     to confirm the commitment that has been a guiding precept of 
     the planning that you and your team are undertaking: that 
     audit rates will not rise relative to recent years for 
     households making under $400,000 annually.
       Specifically, I direct that any additional resources--
     including any new personnel or auditors that are hired--shall 
     not be used to increase the share of small business or 
     households below the $400,000 threshold that are audited 
     relative to historical levels. This means that, contrary to 
     the misinformation from opponents of this legislation, small 
     business or households earning $400,000 per year or less will 
     not see an increase in the chances that they are audited.
       Instead, enforcement resources will focus on high-end 
     noncompliance. There, sustained, multiyear funding is so 
     critical to the agency's ability to make the investments 
     needed to pursue a robust attack on the tax gap by targeting 
     crucial challenges. like large corporations, high-net-worth 
     individuals and complex pass-throughs, where today the IRS 
     has resources to initiate just 7,500 audits annually out of 
     more than 4 million returns received.
       This is challenging work that requires a team of 
     sophisticated revenue agents in place to spend thousands of 
     hours poring over complicated returns, and it is also work 
     that has huge revenue potential: indeed, an additional hour 
     auditing someone making more than $5 million annually 
     generates an estimated $4,500 of additional taxes collected. 
     This is essential work that l know the IRS is eager to 
     undertake.
       For regular taxpayers, as you emphasized last week, the 
     result of this resource infusion will be a lower likelihood 
     of audit by an agency that has the data and technological 
     infrastructure in place to target enforcement resources where 
     they belong--on the high end of the income distribution, 
     where the top 1 percent alone is estimated to not be paying 
     $160 billion in owed taxes each year. That's important as a 
     matter of revenue-raising, but it's also essential as a 
     matter of fairness.
       Crucially, these resources will support a much-needed 
     upgrade of technology that is decades out-of-date, and an in 
     vestment in taxpayer service so that the IRS is finally able 
     to communicate with taxpayers in an efficient, timely manner. 
     I look forward to working with you on creating new digital 
     tools to allow taxpayers to get information from the IRS 
     instantaneously and on improving taxpayer service, so the 
     agency is well-equipped to answer calls when they come in.
       This historic investment in our tax system will accomplish 
     two critical objectives. It will raise substantial revenue to 
     address the deficit; and it will create a fairer system, 
     where those at the top who do not today comply with their tax 
     obligations find it far less easy to do so, and where all 
     taxpayers receive the service from the IRS that they deserve, 
     and that your dedicated workforce is eager to deliver. The 
     importance of the work ahead cannot be overstated.
           Sincerely,
                                                  Janet L. Yellen.

  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentleman from Oregon 
(Mr. Blumenauer), a very capable member of the Ways and Means 
Committee.
  Mr. BLUMENAUER. Mr. Speaker, I appreciate how Mr. Neal laid out the 
facts here.
  The Family and Small Business Taxpayer Protection Act is a sham. The 
facts are that this legislation will shield tax cheats at the expense 
of working families.
  The last time Republicans were in charge, they systematically 
defunded the IRS. The agency lost nearly 20 percent of its funding, 
shed more than 20,000 employees, and the audit rate for millionaires 
dropped 70 percent. We heard one of our Republican colleagues make that 
point.
  This legislation will enable those at the top of the heap to be able 
to remember the taxes they should have reported. It raises, as we have 
heard, $187 billion in revenue. This bill, if enacted, would add to the 
deficit $114 billion because it is misguided and misdirected and wrong.
  Mr. Speaker, I strongly urge the rejection of this legislation 
enforcement of the laws for everybody.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the gentleman 
from Tennessee (Mr. Kustoff), a member of the Ways and Means Committee.
  Mr. KUSTOFF. Mr. Speaker, I rise today in support of the Family and 
Small Business Taxpayer Protection Act.
  This new Republican majority is focused on protecting taxpayers and 
small businesses from overreach and abuse. Blocking the Biden 
administration from unleashing 87,000 new IRS agents on taxpayers is a 
crucial first step toward fulfilling our commitment to America.
  This legislation will prohibit the IRS from using new funds to target 
lower- and middle-class families and small businesses with more 
burdensome and intrusive audits.
  As households grapple with a struggling economy, the last thing they 
need is more harassment from a supercharged IRS.
  Republicans are unified in our effort to bring economic relief to 
Americans, not more government overreach and hardship.
  Mr. Speaker, I urge my colleagues to support this legislation and 
stop the administration's weaponizing of the IRS.
  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentleman from New 
Jersey (Mr. Pascrell), who is sure to offer clarity to this important 
issue.
  Mr. PASCRELL. Mr. Speaker, I rise in rigorous opposition to this 
shortsighted bill, but thank you for allowing us the opportunity to lay 
the facts on the table.
  I mean, it is stunning that while you peddled those falsehoods, you 
seek at the same time to add $114 million to the deficit. The chairman 
said it. Everybody said it.
  Republican budget cuts have left the IRS with 2,284 fewer skilled 
auditors to keep wealthy taxpayers from cheating than it had in 1954. 
That makes no sense. You know it is more complicated. We taxed work 
before. Now we tax assets, and we cover them up when we do our taxes.
  Who the heck are you kidding? The GOP plan would aid and abet a flood 
of tax cheating by Wall Street tycoons. That would be the direct impact 
of this bill. Thankfully, it is going to be dead on arrival when it 
goes to the other side of the building.
  Republicans love that our massive tax gap keeps growing, and they 
want to make it worse.

[[Page H86]]

  

  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the gentleman 
from Oklahoma (Mr. Hern), a member of the Ways and Means Committee.
  Mr. HERN. Mr. Speaker, on March 1, 2022, President Biden made a 
promise to the American people during the State of the Union Address 
before a joint session of Congress. I was sitting in this room as the 
President stated: ``Under my plan, nobody earning less than $400,000 a 
year will pay an additional penny in new taxes. Nobody.''
  Mr. Speaker, the President lied to us all because, in August 2022, 
CBO confirmed that the Democrats' Inflation Reduction Act, which 
supercharges the IRS with 87,000 new agents, will, in fact, lead to 
more audits and enforcement measures and higher taxes for families 
making less than $400,000 a year. In fact, the CBO confirmed that 
lower- and middle-income taxpayers would see as many as 710,000 more 
audits.
  Americans are suffering under harmful inflation caused by the 
irresponsible fiscal policies from President Biden and our 
congressional Democrats. The last thing the American people need is 
burdensome IRS audits.
  Mr. Speaker, I urge my colleagues to vote ``yes'' on this bill to 
make Joe Biden's promise come true.
  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentleman from 
Illinois (Mr. Davis), a very capable Member from Chicago.
  Mr. DAVIS of Illinois. Mr. Speaker, I know this may be the beginning 
of a new year, but we are back to the same old thoughts, ideas, and 
practices: Protect the wealthy. Disadvantage the poor.
  We need a tax system that is fair. We need the skilled auditors who 
can look at the more complex returns of wealthy taxpayers and make sure 
that they are paying their fair share.
  There is no doubt that this is a sham. Vote this down because it 
takes away opportunity for fairness in our tax system. We need the 
auditors.
  Mr. SMITH of Nebraska. Mr. Speaker, very briefly, I point out that 
the Biden administration is not giving us all the information. 
Secretary Yellen said that the IRS will not raise audit rates for 
taxpayers making less than $400,000 ``relative to historic levels.'' 
What does ``historic levels'' really mean?
  I include in the Record a CBO blog post from 2021 examining the Biden 
administration's $80 billion proposal and stating that it would 
``return audit rates to the levels of about 10 years ago'' and that 
``the rate would rise for all taxpayers.''

                   [From the CBO Blog, Sept. 2, 2021]

              The Effects of Increased Funding for the IRS

                           (By Phill Swagel)

       Last month, the Congressional Budget Office published An 
     Analysis of Certain Proposals in the President's 2022 Budget. 
     Since then, CBO has completed its analysis of another 
     proposal in the President's budget, an increase in spending 
     for the Internal Revenue Service's (IRS's) enforcement 
     activities. CBO estimates that portions of the 
     Administration's proposal to increase funding for the IRS by 
     $80 billion over the 2022-2031 period would increase revenues 
     by approximately $200 billion over those 10 years. That 
     estimate does not include changes in revenues resulting from 
     portions of the proposal that involve new information-
     reporting requirements and other changes to the tax code; 
     those changes are estimated by the staff of the Joint 
     Committee on Taxation (JCT).


                              the proposal

       The Administration proposes funding for the IRS that is $80 
     billion greater over 10 years than the amounts in CBO's July 
     2021 baseline projections (which reflect the assumption that 
     current laws generally do not change). Two types of funding 
     would be provided: discretionary appropriations, which would 
     mainly be used for enforcement activities; and mandatory 
     funding, which would be used for a variety of activities (not 
     only enforcement but also operations support, business-
     systems modernization, and taxpayer services).
       Spending would increase in each year between 2021 and 2031, 
     though the highest growth would occur in the first few years. 
     By 2031, CBO projects, the proposal would make the IRS's 
     budget more than 90 percent larger than it is in CBO's July 
     2021 baseline projections and would more than double the 
     IRS's staffing. Of the $80 billion, CBO estimates, about $60 
     billion would be for enforcement and related operations 
     support.
       The Administration also proposes that financial 
     institutions increase their reporting about account inflows 
     and outflows. Part of the increased funding would support the 
     implementation of a new information-reporting system to be 
     used by those institutions. The resulting effects on revenues 
     are estimated by JCT and are not included in CBO's estimate 
     of an approximately $200 billion increase.


   how cbo estimates the effect on revenues of increased irs funding

       CBO's estimate of revenues is based on the IRS's projected 
     returns on investment (ROIs) for spending on new enforcement 
     initiatives. The IRS estimates those ROIs by calculating the 
     expected revenues that would be raised from taxes, interest, 
     and penalties as a result of the new initiatives and dividing 
     them by their additional cost. (The agency has provided ROIs 
     over the past five years as part of its budget 
     justification.) The IRS's ROIs ramp up over three years as 
     staff become trained and fully productive, arrive at the peak 
     level, and then stay there. In recent years, peak ROIs have 
     ranged from 5 to 9. That is, a $1 increase in spending on the 
     IRS's enforcement activities results in $5 to $9 of increased 
     revenues.
       CBO adjusts the ROIs so that they better reflect the 
     marginal return on additional spending. First, CBO expects 
     the IRS to prioritize the enforcement activities that it 
     thinks will have the highest average return; additional 
     enforcement spending would therefore have lower returns than 
     previous spending. Second, CBO expects taxpayers to adapt to 
     the IRS's enforcement activities and adopt new ways of 
     evading detection, so an enforcement activity may have a 
     lower return in later years. Finally, the productivity of the 
     IRS's enforcement activities will also depend on the IRS's 
     other capabilities. For example, modernized information 
     technology that stored all of a taxpayer's information in 
     digital form could increase the productivity of examiners 
     (the employees who detect taxpayers' noncompliance).
       CBO's estimate of revenues also accounts for the timing of 
     collections resulting from enforcement activity by new hires. 
     Taxes are assessed at the end of an audit; if taxpayers 
     disagree with the assessment, they can appeal and continue to 
     litigate. The length of each step depends on the complexity 
     of the case. CBO estimates that an audit of medium complexity 
     would take 24 months to complete. That time, combined with 
     the expected training time for an experienced new hire, 
     suggests that the IRS would begin to collect revenues 30 
     months after the new hire joined the agency. (The timing 
     would be longer when cases were more complex or when the 
     taxpayer did not agree to the assessment and appealed.)


                what is incorporated into cbo's estimate

       CBO's estimate of the change in revenues is relative to the 
     amount of revenues collected under current law (which is 
     reflected in CBO's baseline budget projections). Under 
     guidelines agreed to by the legislative and executive 
     branches, this change in revenues typically would not be 
     included in a cost estimate for legislation that brought 
     about the change, but it would be reflected in CBO's baseline 
     budget projections once the legislation was enacted. CBO's 
     estimate reflects the assumption that the proposed 
     increase in funding would follow the proposed expansion of 
     information reporting. Expanded information reporting 
     might allow the IRS to better target potentially 
     noncompliant taxpayers; it might also prompt taxpayers to 
     file more accurate tax returns. It might have a positive 
     effect on revenues collected, but it might also reduce the 
     ROIs from enforcement activities, because if returns are 
     more accurate, there will be less noncompliance to audit. 
     In CBO's and JCT's judgment, those effects roughly offset 
     each other, on net, resulting in a small positive effect 
     on ROIs.
       CBO's estimate includes ``direct revenues'' and ``protected 
     revenues.'' Direct revenues are generated from the IRS's 
     auditing and collection efforts. Protected revenues result 
     when the IRS prevents a taxpayer from recouping previously 
     assessed and paid taxes--for example, when the IRS prevents 
     fraudulent refunds or disallows claims in taxpayers' amended 
     returns.
       The estimate reflects CBO's expectation that the increased 
     enforcement activities would change the voluntary compliance 
     rate--that is, the share of taxes owed that are paid 
     voluntarily and on time--only modestly. The magnitude of that 
     effect is highly uncertain, however, and the empirical 
     evidence about the effects of audits on taxpayers' behavior 
     is inconclusive. Research about such deterrence finds varying 
     responses, depending on the type of taxpayer. People 
     generally increase their reported income in the years 
     following an audit, but people with higher income generally 
     do not, and neither do corporations. (For more discussion, 
     see Box 1 in CBO's July 2020 report Trends in the Internal 
     Revenue Service's Funding and Enforcement.)


        how the current analysis differs from previous analyses

       In that July 2020 report, CBO estimated that a $40 billion 
     increase in enforcement funding would raise $103 billion (for 
     a net effect of $63 billion). The methods used for this 
     estimate differ in several ways from the methods used for 
     that one.
       First, CBO used updated ROIs that incorporated the IRS's 
     most recent estimates of the return on enforcement 
     activities. CBO then adjusted the ROIs to reflect both direct 
     revenues and protected revenues, increasing the peak ROI from 
     6.4 to 7.1.
       Second, CBO's current methods allow for positive 
     interaction between enforcement spending and other IRS 
     funding. That is, CBO accounts for ways in which increased 
     capabilities, such as more digitization of

[[Page H87]]

     taxpayers' information and greater visibility of income 
     flows, can increase the productivity of enforcement 
     activities.
       Third, this analysis reflects a longer time frame for 
     receiving enforcement revenues because of the complexity of 
     audits associated with high-wealth individuals, large 
     corporations, and partnerships. Taxpayers with greater 
     resources may be more likely to appeal assessments or to 
     litigate their disputes in the U.S. Tax Court, delaying the 
     receipt of assessed taxes. As a result, revenues from some 
     audits will not be received until later than CBO estimated in 
     its July 2020 analysis.


                         sources of uncertainty

       The change in revenues resulting from an increase in the 
     IRS's funding could be different from CBO's estimate. It 
     depends on the IRS's ability to hire experienced candidates, 
     changes in voluntary compliance, and the interaction of 
     enforcement funding with the IRS's other capabilities.
       The IRS intends to hire mid- and senior-level people with 
     private-sector experience who will not require a great deal 
     of training to become productive. But it might not be able to 
     hire its desired mix of candidates. If it hired less 
     experienced candidates, it would have to spend more resources 
     training them. Not only would they take longer to become 
     productive, but current staff members would have to devote 
     more time to training them. A related source of uncertainty 
     in CBO's estimate is attrition: If it proved higher than 
     expected, personnel would have fewer years at full 
     productivity.
       An increase in the IRS's funding could signal that the 
     agency was more capable of detecting noncompliance, thus 
     increasing voluntary compliance and revenues. However, if 
     there were fewer noncompliant taxpayers to audit, the ROIs 
     from the IRS's enforcement activities would drop, and the 
     direct revenues from increased enforcement would be lower 
     than CBO estimated.
       Finally, it is unclear how much the greater information 
     reporting or the increased IRS spending in areas other than 
     enforcement (such as technology) could improve examiners' 
     productivity. Greater nonenforcement spending might increase 
     overall revenues but decrease ROIs--for example, if improved 
     services for taxpayers enabled those taxpayers to more 
     accurately determine their tax liability, reducing the pool 
     of noncompliant taxpayers to audit.


                          effects on taxpayers

       The proposed increase in spending on the IRS's enforcement 
     activities would result in higher audit rates than those 
     underlying CBO's baseline budget projections. Between 2010 
     and 2018, the audit rate for higher-income taxpayers fell, 
     while the audit rate for lower-income taxpayers remained 
     fairly stable. In CBO's baseline projections, the overall 
     audit rate declines, resulting in lower audit rates for both 
     higher-income and lower-income taxpayers. The proposal, by 
     contrast, would return audit rates to the levels of about 10 
     years ago; the rate would rise for all taxpayers, but higher-
     income taxpayers would face the largest increase. In 
     addition, the Administration's policies would focus 
     additional IRS resources on enforcement activity aimed at 
     high-wealth taxpayers, large corporations, and partnerships. 
     CBO estimates that if the proposals were enacted, tax 
     compliance would be improved, and more households would meet 
     their obligation under the law.
       Higher audit rates would probably also result in some 
     audits of taxpayers who would later be determined not to owe 
     additional taxes. However, the Administration's proposal for 
     more information reporting, as well as additional spending on 
     IRS technology, might reduce the burden on compliant 
     taxpayers by allowing the IRS to better target noncompliant 
     ones and to reduce the number of audits that resulted in no 
     change in tax assessment.

  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the 
gentlewoman from West Virginia (Mrs. Miller), a member of the Ways and 
Means Committee.
  Mrs. MILLER of West Virginia. Mr. Speaker, I rise in support of the 
Family and Small Business Taxpayer Protection Act.
  The last 2 years under Democrat rule have resulted in terrible 
policies and more unnecessary taxes for the American people. Americans 
have been feeling the weight of destructive policies since their first 
day in power, and now it is time for our Republican majority to fix 
this mess.
  The pressure on American taxpayers has continued to increase since 
the passage of the so-called Inflation Reduction Act when they gave $80 
billion of new funding for the IRS to hire the 87,000 new agents to 
needlessly audit families and small businesses that are forced to fund 
the out-of-control spending and misguided Green New Deal priorities.
  How do more audits and scrutiny from the IRS benefit hardworking 
Americans? Liberals in Congress chose to target American taxpayers by 
supercharging the IRS, which solely focuses on auditing the hardworking 
Americans who already pay more than their fair share. This is 
unacceptable and must be reversed.
  Through the Inflation Reduction Act, Democrats used the tools of the 
IRS as a means to increase reckless spending.
  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentleman from New 
York (Mr. Higgins), an individual whose knowledge of the economic 
system in America is unsurpassed.
  Mr. HIGGINS of New York. Mr. Speaker, Charles Rettig, the former IRS 
Commissioner, who was appointed by the Trump administration, said early 
last year that the United States is losing $1 trillion in unpaid taxes 
every year. He said the agency lacks the resources to catch tax cheats. 
Most of the unpaid taxes, he said, are a result of evasion by wealthy 
and large corporations.
  With this legislation we are considering today, it is clear that the 
GOP once again is putting tax-evading profits over people.
  Mr. Speaker, I am asking my colleagues to join me in rejecting this 
legislation to protect working families that play by the rules and 
fight fairly every day.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 2 minutes to the 
gentlewoman from California (Mrs. Steel).
  Mrs. STEEL. Mr. Speaker, I rise in strong support of the Family and 
Small Business Taxpayer Protection Act, and I am proud to co-lead this 
important legislation with the gentleman from Nebraska (Mr. Smith), my 
friend.
  As millions of American families across the country struggle to 
afford basic goods, from food to fuel--in large part thanks to the 
inflation brought on by the absurd spending blowout of the last 2 
years--the very last thing that taxpayers need is a bloated and 
weaponized IRS.
  Unfortunately, that is exactly what they got when the administration 
rammed through $80 billion to hire 87,000 new IRS agents to harass and 
spy on middle-class and low-income families, with most of 1.2 million 
new additional audits.
  The agency needs reform and modernization, but that is not what these 
billions in taxpayer dollars did. Of the $80 billion, only $3.2 billion 
was set aside for taxpayer services. Meanwhile, new audits and 
enforcement got $45 billion.
  The job of the IRS is to serve taxpayers, not target them. That is 
why we must pass today's bill, which will rescind the IRS funding for 
enforcement while leaving in place the funding for improvements to 
customer service and technology.
  Californians and all Americans deserve an accountable government and 
a strong economy. An accountable government is one that serves its 
citizens, not one that empowers bureaucrats to target taxpayers. We 
will never build an economy that is strong by weaponizing government 
agencies to cripple small businesses and employers.
  Mr. Speaker, I urge all of my colleagues who support an accountable 
government and a strong economy to vote ``yes'' on this legislation to 
empower American families, support small businesses, and protect 
taxpayers.
  Mr. NEAL. Mr. Speaker, the challenge that was offered by the 
gentlewoman from California is as simple as this: We are weaponizing 
billionaires not to pay their fair share. That is what is happening.
  What we are asking here is the simplicity of allowing people at the 
very top to pay their fair share.
  Mr. Speaker, I yield 1 minute to the gentlewoman from Alabama (Ms. 
Sewell), a capable and valued member of the Ways and Means Committee.

                              {time}  2000

  Ms. SEWELL. Mr. Speaker, I rise to speak against H.R. 23. The funding 
provided through the Inflation Reduction Act is an important step to 
address the lack of resources for the IRS so that they could do their 
job.
  How many of us have called the IRS and been on the phone waiting for 
hours only to be told that you were being transferred to yet another 
department and also continue to be waiting?
  Over the past year, the IRS has already been cut by 15 percent, and 
more cuts means more delays and lack of services for our constituents. 
As Representative Neal said, the IRS failed to collect over $500 
trillion last year alone because of lack of resources, lack of

[[Page H88]]

compliance, and the targeting of those people who are less fortunate 
through the EITC compliance. They have been hurt.
  Mr. Speaker, this is about tax compliance. This is also about racial 
equity and fairness. Historically, African Americans have been 
disproportionately audited by the IRS due to their claims of EITC. I 
ask for fairness and equity and ask for my colleagues to vote ``no'' 
against this bill.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the gentleman 
from Utah (Mr. Moore).
  Mr. MOORE of Utah. Mr. Speaker, today, we begin the work to reform 
our government to work better for the American people and not against 
them.
  So what do I mean by that?
  The last 2 years Democrats have had control of the White House, 
House, and Senate, and they have passed and attempted historic spending 
provisions. In order to do that, you have to raise revenue. This bill 
became a ploy to leverage the IRS to be able to essentially do that 
without directly raising taxes. That is what we are talking about here.
  I represent thousands of IRS employees. They are some of the best, 
most hardworking people in my entire district. As I talk to them, they 
care about two major things: customer service, and that technology 
needs to be improved. That is what I love about this bill because that 
keeps that in here, and we actually want to focus our spending to be 
able to directly support them.
  As we put forth this bill, we are sincerely trying to take what all 
of our constituents have been saying: We need the IRS to have more 
support on customer service and technology.
  That is why I urge everybody to vote ``yes'' on this bill.
  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentlewoman from 
California (Ms. Chu), a very capable member of the Ways and Means 
Committee.
  Ms. CHU. Mr. Speaker, I rise in strong opposition to this bill. It is 
telling that the very first bill that the new Republican majority 
brought to the floor aims to protect wealthy tax cheats from following 
the law.
  For a decade, Republicans succeeded in stripping the IRS of the 
resources it needs to serve the American people, and the result has 
been frustrating and harmful to workers and families, but it is 
certainly fantastic for wealthy tax cheats who unfairly kept up to $1 
trillion from the IRS every year.
  Congressional Democrats reversed this trend when we passed the 
Inflation Reduction Act. Now, the IRS will finally have the resources 
it needs to properly audit wealthy taxpayers and corporations with 
complex returns and ensure that average Americans don't have to wait 
hours on the phone to fix problems.
  Americans deserve an IRS that fulfills its most basic duty to ensure 
all taxpayers and corporations follow the law and pay their fair share 
in taxes.
  Vote ``no'' on this bill.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the 
gentlewoman from New York (Ms. Tenney).
  Ms. TENNEY. Mr. Speaker, I rise in strong support of the Family and 
Small Business Taxpayer Protection Act.
  I am a small manufacturing businessowner, and I have also worked as a 
tax attorney, so I know firsthand the kind of power that the IRS has 
over our small businessowners and lower- and middle-income taxpayers.
  Last year, to fund their leftwing agenda, the Democrats in Congress 
decided to spend your hard-earned tax dollars on 87,000 new IRS agents, 
making the IRS nearly the size of the U.S. Marine Corps.
  The Biden administration claims these agents will not set their 
sights on hardworking Americans. The facts reveal the opposite. The 
Democrats claim these new audits will only affect Americans making over 
$400,000. The facts prove otherwise.
  However, the investment of $80 billion with over $40 billion being 
spent for enforcement will exact just a fraction of the revenue they 
hope to get to fund their spending sprees. The American taxpayers 
deserve better.
  The truth is their plan will target middle- and lower-income 
taxpayers. The CBO agrees, and it released a finding that said 
additional agents will lead to as many as 700,000 more audits on 
Americans making less than $75,000 a year.
  The core principle of our system of government is innocent until 
proven guilty, not guilty until proven innocent as the IRS attempts to 
do.
  I encourage my colleagues to support H.R. 23.
  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Wisconsin (Ms. Moore), a very capable member of the Ways and Means 
Committee.
  Ms. MOORE of Wisconsin. Mr. Speaker, I rise to strongly oppose this 
misnamed Republican bill, which purports to protect families and small 
businesses, but instead, continues the unrelenting effort to starve the 
IRS.
  The only Americans that this legislation protects are tax cheats.
  What is up with this conversation about how many agents are going to 
be added?
  The IRS has fewer agents today than it had in 1953, and our economy 
is seven times larger, and our population has more than doubled since 
then.
  The characterization of the IRS as a militant government agency 
deployed to harass unwitting small businesses and Americans is a 
flagrant lie.

  Our voluntary tax system depends on our taxpayers trusting that it 
works fairly. We need to ensure that the IRS can examine complex tax 
avoidance strategies of well-heeled individuals and businesses, period.
  To do that, we need to help the agency modernize and transition away 
from decades-old technology, and we must support the agency's capacity 
to effectively administer a range of crucial tax benefits.
  I urge my colleagues to vote ``no.''
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the 
gentlewoman from Indiana (Mrs. Spartz).
  Mrs. SPARTZ. Mr. Speaker, I will clarify what exactly this bill is 
doing. Last year, Congress gave an additional $80 billion to the IRS on 
top of $12 billion of existing funding, which increased the IRS' budget 
by almost eight times.
  This bill still keeps almost $10 billion in additional funding to 
modernize IRS, which is still almost doubling their $12 billion budget 
but eliminates over $70 billion of wasteful and egregious aggression 
against the American taxpayer by the Federal Government.
  As someone who spent over a decade in public accounting and also 
started my own businesses, I never felt that we didn't have enough 
government. On the contrary.
  I hear the same message when I go all across my district--small 
businesses and entrepreneurs have a hard time surviving.
  I hope my Democrat colleagues will also support this commonsense 
adjustment to relieve the undue burden on American families.
  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentleman from 
Michigan (Mr. Kildee).
  Mr. KILDEE. Mr. Speaker, I thank Mr. Neal for yielding. The Inflation 
Reduction Act was a huge step toward lowering healthcare costs and 
energy costs for families all across the country and creating new jobs 
in my home State of Michigan.
  It was fully paid for by making sure the biggest corporations and the 
wealthiest individuals paid their fair share in taxes.
  This funding for the Internal Revenue Service helps ensure that it 
has the resources to go after those wealthy taxpayers that are avoiding 
paying their fair share.
  It is simply not fair that billionaires like Elon Musk and massive 
companies like Amazon have paid less in Federal income taxes some years 
than a Bay City teacher, a Saginaw nurse, or a Midland factory worker.
  Further, the Inflation Reduction Act is helping to fight inflation, 
bringing down costs for Americans.
  With this bill, Republicans are trying to roll back these efforts to 
fight inflation.
  A vote against the motion to recommit that I will offer is a vote 
against the Inflation Reduction Act.
  Today, the nonpartisan Congressional Budget Office said this bill 
will add $114 billion to the national deficit.
  This is the first order of business for this majority.
  Mr. Speaker, I ask unanimous consent to add the text of this 
amendment in the Record immediately prior to the vote on the motion to 
recommit.

[[Page H89]]

  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Michigan?
  There was no objection.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the gentleman 
from Virginia (Mr. Cline).
  Mr. CLINE. Mr. Speaker, it is a bright, new day. Today, we begin to 
deliver real results for the American people by passing legislation to 
block the Biden administration from unleashing 87,000 new bureaucrats 
and agents at the IRS on families and small businesses.
  Last Congress, Democrats voted to supercharge the IRS with $80 
billion of taxpayer money focused on IRS enforcement and hiring more 
auditors to squeeze taxpayers.
  It is not just wealthy Americans. With that expanded audit capacity, 
the IRS can squeeze more money out of middle- and lower-income families 
and small businesses, as well.
  The Democrats' American Rescue Plan called for the IRS to require 
payment apps like Venmo and PayPal to report Americans who made over 
$600 in transactions.
  Imagine what 87,000 new agents will do.
  Republicans want an IRS that works for taxpayers, not targets them. 
That is why this bill leaves in place the IRS funding for improvements 
to customer service and technology.
  Because Americans demand and deserve a government that is 
accountable, not to the powerful but to the people, repealing funding 
for Biden's army of auditors is a great first step in the right 
direction.
  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentleman from 
Virginia (Mr. Beyer), a very successful businessman and entrepreneur.
  Mr. BEYER. Mr. Speaker, I rise in opposition to this absurd 
legislation. The bill before us will cut the necessary investments to 
make the IRS more responsive to regular people, improve customer 
service, and work through the IRS backlog.
  In exchange for making the IRS less responsive to the people, the 
bill is going to add $114 billion to the deficit, according to the CBO.
  Why?
  My Republican friends want us to believe that a horde of 87,000 armed 
Federal agents are ready to kick in your doors for tax enforcement.
  This is total nonsense, a fantasy, a fabrication that has been fact-
checked over and over again and always found false.
  The real reason they are passing this bill is to protect wealthy tax 
cheats like the former President from having their tax returns 
scrutinized.
  The richest 1 percent avoid paying $100 billion every year because we 
don't fund the IRS.
  Republicans' first priority is to help the very rich tax evaders at 
the expense of their own regular American constituents.
  I urge Members to vote against this misguided legislation.
  Mr. SMITH of Nebraska. Mr. Speaker, may I inquire how much time is 
remaining?
  The SPEAKER pro tempore. The gentleman from Nebraska has 10 minutes 
remaining. The gentleman from Massachusetts has 11 minutes remaining.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1\1/2\ minutes to the 
gentleman from Pennsylvania (Mr. Meuser).
  Mr. MEUSER. Mr. Speaker, I thank my friend from Nebraska for 
yielding.
  The idea, Mr. Speaker, of hiring 87,000 new IRS agents to close the 
tax gap is misguided. I served as revenue secretary for the great 
Commonwealth of Pennsylvania. We did, in fact, close a tax gap through 
what proved to be very effective measures. These measures included 
improving IT systems and processes, which truly determined tax evasion 
from tax avoidance.
  Largely taking the easy approach of hiring 87,000 new agents, 
doubling the size of the IRS--I don't know who thinks that is a good 
idea--does not improve the quality of information used to accomplish 
the goal of collecting all tax revenues that are due. It will only 
increase the number of audits, most often on innocent small businesses 
and individuals.
  As well, the CBO projection of $186 billion of increased revenue was 
established before the administration said that only those above 
$400,000 in income would be audited. Currently, nearly 90 percent of 
the audits are conducted on small businesses and those making less than 
$400,000.
  How can you make a projection when your targeted audience is reduced 
by 90 percent?
  This is an absolutely flawed plan that will do nothing but increase 
the size of government, increase audits on law-abiding businesses, and 
fail to achieve its intended results. It is Big Government at its 
worse.
  According to the CBO, the hiring of these new IRS agents will also 
cause audit rates to rise on all taxpayers. A bipartisan analysis found 
that this increase in funding would result in 1.2 million more audits; 
700,000 of them will target taxpayers making $75,000 or less. These new 
IRS agents will not be targeting wealthy tax cheats as they claim. They 
will be targeting everyday Americans.
  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentleman from 
Pennsylvania (Mr. Evans), a very distinguished member of the Ways and 
Means Committee.

                              {time}  2015

  Mr. EVANS. Mr. Speaker, I rise in strong opposition to this 
legislation that will cut major investments in the IRS that will help 
American taxpayers receive the benefits they have earned. It is 
important.
  This tax cheat act would gut IRS funding to protect Republicans' 
wealthy corporate investors. It is important to understand that I urge 
my colleagues to reject the Republican tax cheat act.
  It is important because this is politics above people. The reality is 
this is not about people. This is really all about politics.
  I thank Mr. Neal, who led this effort through the Ways and Means 
Committee, and colleagues who fought for the importance of investment 
in the IRS.
  Mr. Speaker, I stand today to encourage people to say ``no.''
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the gentleman 
from Wisconsin (Mr. Grothman).
  Mr. GROTHMAN. Mr. Speaker, I have a very high opinion of the 
gentleman from Massachusetts, but what scares me in this bill are the 
numbers.
  Right now, the IRS has about 78,000 employees, of which about 10,000 
are what they describe as agents. It is not surprising that is less 
than you had in 1954 because, in 1954, nothing was computerized. Now, 
the 1099s, the W-2s, they come in and automatically the computers show 
whether they are on your return or not. If they are not on the return, 
you get a letter from the IRS saying you owe X amount of money.
  Now, we are going, in one bill, from 78,000 employees, adding an 
additional 83,000. We have no idea how many of those are going to be 
agents poking around, looking at people, but you have to figure it is 
going to be an increase of five or six times what they already have.
  Wisconsin and Massachusetts are States about the same size. You are 
talking about adding 1,600 employees--assuming it is the same per 
capita, about 1,600 new employees to Massachusetts and Wisconsin.
  What are they going to do with 1,600 new employees? I mean, I can't 
imagine. If you deal with the IRS, the way they deal with it, they do 
things like: ``Well, you owe $20,000.'' You have to find a lawyer to 
fight that.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. NEAL. Mr. Speaker, I think part of that new recruiting class at 
the IRS is going to simply answer the phones. That would be helpful, a 
step in the right direction.
  Mr. Speaker, I yield 1 minute to the gentleman from Illinois (Mr. 
Schneider), a CPA who really knows something about compliance.
  Mr. SCHNEIDER. Mr. Speaker, I rise today to urge my colleagues to 
oppose this bill. It not only increases our national deficit by $114 
billion, but it does so by helping the wealthiest avoid paying taxes 
and transfers that burden onto the backs of hardworking Americans and 
small businesses that follow the law and pay their taxes on time.
  Here is my question: Why, on their very first day legislating with 
their new majority, with their very first bill, is the top Republican 
priority rewarding tax cheats with what is estimated

[[Page H90]]

to be nearly $200 billion in uncollected taxes over the next 10 years, 
$200 billion in taxes not paid by the wealthiest, meaning additional 
debt for everyone else?
  The Inflation Reduction Act dedicated $46 billion to enforcement to 
make sure corporations and wealthy individuals pay the taxes they owe, 
not new taxes, not higher rates, simply ensuring everyone pays what 
they owe.
  Mr. Speaker, I urge my colleagues on the other side of the aisle to 
oppose this outrageous tax scam.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the gentleman 
from Texas (Mr. Fallon).
  Mr. FALLON. Mr. Speaker, I rise to speak in favor of H.R. 23, which 
would defund the $80 billion from the Inflation Reduction Act or, as I 
call it, the inflation enhancement act, and thereby defund the hiring 
of 87,000 new IRS agents, which would, in effect, double the agency.
  Nary a one, not one, of my constituents has asked to hire 87,000 new 
IRS agents, but, in fact, countless have asked if we can hire 87,000 
new Border Patrol agents because there is a crisis and a catastrophe on 
our southern border.
  The last thing we want is to double an agency that is already bloated 
and have them with these 87,000 new agents or, in military parlance, 
five new divisions to harass, stalk, and otherwise terrorize law-
abiding American citizens.
  Who is this going to really kick in the teeth? It is not going to be 
the wealthy or the poor. It is going to be the small business owners 
and the middle-class, hardworking Americans.
  Do you want to start a new Congress and do it well? This is a great 
bill, and I urge the passing of H.R. 23, the Small Business and 
Taxpayer Protection Act.
  Mr. NEAL. Mr. Speaker, a reminder that the 87,000 is over 10 years. 
The $80 billion is over 10 years. That is $8 billion a year for 
replacement of those who retire, who leave the service of the IRS.
  Mr. Speaker, I yield 1 minute to the gentleman from California (Mr. 
Panetta), another very capable member of the Ways and Means Committee.
  Mr. PANETTA. Mr. Speaker, I rise in opposition to H.R. 23 because our 
government needs the resources to go after wealthy tax cheats who 
defraud the government.
  Because people don't pay their taxes, the Federal Government is 
cheated out of at least $400 billion each year. In fact, President 
Trump's IRS Commissioner said that number could be as high as $1 
trillion every year.
  That significant source of revenue could go to paying our bills, 
paying down our debt, and propping up the power of our purse. That is 
exactly why we passed legislation last year that made significant 
investments to crack down on tax cheats.
  That funding will not be used for families or small businesses making 
less than $400,000. Instead, it will be used to go after those who have 
the wealth to pay their taxes but don't or those who can pay for armies 
of accountants to get out of paying for what they should.
  H.R. 23 rescinds that funding for that type of needed enforcement, 
and that is why I oppose it. Our government should have the resources 
necessary to ensure that it is not just the middle class that pays our 
bills and pays our debt, but the wealthy tax dodgers pay their taxes, 
just like play-by-the-rules, hardworking Americans.
  Mr. SMITH of Nebraska. Mr. Speaker, I include in the record a CBO 
post from 2021 examining the Biden administration's $80 billion 
proposal and stating that ``CBO projects the proposal would make the 
IRS' budget more than 90 percent larger than it is in CBO's July 2021 
baseline projections and would more than double the IRS' staffing.''

                     [From CBO Blog, Sept. 2, 2021]

              The Effects of Increased Funding for the IRS

                            (By Phil Swagel)

       Last month, the Congressional Budget Office published An 
     Analysis of Certain Proposals in the President's 2022 Budget. 
     Since then, CBO has completed its analysis of another 
     proposal in the President's budget, an increase in spending 
     for the Internal Revenue Service's (IRS's) enforcement 
     activities. CBO estimates that portions of the 
     Administration's proposal to increase funding for the IRS by 
     $80 billion over the 2022-2031 period would increase revenues 
     by approximately $200 billion over those 10 years. That 
     estimate does not include changes in revenues resulting from 
     portions of the proposal that involve new information-
     reporting requirements and other changes to the tax code; 
     those changes are estimated by the staff of the Joint 
     Committee on Taxation (JCT).


                              The Proposal

       The Administration proposes funding for the IRS that is $80 
     billion greater over 10 years than the amounts in CBO's July 
     2021 baseline projections (which reflect the assumption that 
     current laws generally do not change). Two types of funding 
     would be provided: discretionary appropriations, which would 
     mainly be used for enforcement activities; and mandatory 
     funding, which would be used for a variety of activities (not 
     only enforcement but also operations support, business-
     systems modernization, and taxpayer services).
       Spending would increase in each year between 2021 and 2031, 
     though the highest growth would occur in the first few years. 
     By 2031, CBO projects, the proposal would make the IRS's 
     budget more than 90 percent larger than it is in CBO's July 
     2021 baseline projections and would more than double the 
     IRS's staffing. Of the $80 billion, CBO estimates, about $60 
     billion would be for enforcement and related operations 
     support.
       The Administration also proposes that financial 
     institutions increase their reporting about account inflows 
     and outflows. Part of the increased funding would support the 
     implementation of a new information-reporting system to be 
     used by those institutions. The resulting effects on revenues 
     are estimated by JCT and are not included in CBO's estimate 
     of an approximately $200 billion increase.


   How CBO Estimates the Effect on Revenues of Increased IRS Funding

       CBO's estimate of revenues is based on the IRS's projected 
     returns on investment (ROls) for spending on new enforcement 
     initiatives. The IRS estimates those ROls by calculating the 
     expected revenues that would be raised from taxes, interest, 
     and penalties as a result of the new initiatives and dividing 
     them by their additional cost. (The agency has provided ROls 
     over the past five years as part of its budget 
     justification.) The IRS's ROls ramp up over three years as 
     staff become trained and fully productive, arrive at the peak 
     level, and then stay there. In recent years, peak ROls have 
     ranged from 5 to 9. That is, a $1 increase in spending on the 
     IRS's enforcement activities results in $5 to $9 of increased 
     revenues.
       CBO adjusts the ROls so that they better reflect the 
     marginal return on additional spending. First, CBO expects 
     the IRS to prioritize the enforcement activities that it 
     thinks will have the highest average return; additional 
     enforcement spending would therefore have lower returns than 
     previous spending. Second, CBO expects taxpayers to adapt to 
     the IRS's enforcement activities and adopt new ways of 
     evading detection, so an enforcement activity may have a 
     lower return in later years. Finally, the productivity of the 
     IRS's enforcement activities will also depend on the IRS's 
     other capabilities. For example, modernized information 
     technology that stored all of a taxpayer's information in 
     digital form could increase the productivity of examiners 
     (the employees who detect taxpayers' noncompliance).
       CBO's estimate of revenues also accounts for the timing of 
     collections resulting from enforcement activity by new hires. 
     Taxes are assessed at the end of an audit; if taxpayers 
     disagree with the assessment, they can appeal and continue to 
     litigate. The length of each step depends on the complexity 
     of the case. CBO estimates that an audit of medium complexity 
     would take 24 months to complete. That time, combined with 
     the expected training time for an experienced new hire, 
     suggests that the IRS would begin to collect revenues 30 
     months after the new hire joined the agency. (The timing 
     would be longer when cases were more complex or when the 
     taxpayer did not agree to the assessment and appealed.)
       What Is Incorporated Into CBO's Estimate. CBO's estimate of 
     the change in revenues is relative to the amount of revenues 
     collected under current law (which is reflected in CBO's 
     baseline budget projections). Under guidelines agreed to by 
     the legislative and executive branches, this change in 
     revenues typically would not be included in a cost estimate 
     for legislation that brought about the change, but it would 
     be reflected in CBO's baseline budget projections once the 
     legislation was enacted.
       CBO's estimate reflects the assumption that the proposed 
     increase in funding would follow the proposed expansion of 
     information reporting. Expanded information reporting might 
     allow the IRS to better target potentially noncompliant 
     taxpayers; it might also prompt taxpayers to file more 
     accurate tax returns. It might have a positive effect on 
     revenues collected, but it might also reduce the ROIs from 
     enforcement activities, because if returns are more accurate, 
     there will be less noncompliance to audit. In CBO's and JCT's 
     judgment, those effects roughly offset each other, on net, 
     resulting in a small positive effect on ROIs.
       CBO's estimate includes ``direct revenues'' and ``protected 
     revenues.'' Direct revenues are generated from the IRS's 
     auditing and collection efforts. Protected revenues result 
     when the IRS prevents a taxpayer from recouping previously 
     assessed and paid taxes-

[[Page H91]]

     for example, when the IRS prevents fraudulent refunds or 
     disallows claims in taxpayers' amended returns.
       The estimate reflects CBO's expectation that the increased 
     enforcement activities would change the voluntary compliance 
     rate--that is, the share of taxes owed that are paid 
     voluntarily and on time-only modestly. The magnitude of that 
     effect is highly uncertain, however, and the empirical 
     evidence about the effects of audits on taxpayers' behavior 
     is inconclusive. Research about such deterrence finds varying 
     responses, depending on the type of taxpayer. People 
     generally increase their reported income in the years 
     following an audit, but people with higher income generally 
     do not, and neither do corporations. (For more discussion, 
     see Box 1 in CBO's July 2020 report Trends in the Internal 
     Revenue Service's Funding and Enforcement.)
       How the Current Analysis Differs From Previous Analyses. In 
     that July 2020 report, CBO estimated that a $40 billion 
     increase in enforcement funding would raise $103 billion (for 
     a net effect of $63 billion). The methods used for this 
     estimate differ in several ways from the methods used for 
     that one.
       First, CBO used updated ROIs that incorporated the IRS's 
     most recent estimates of the return on enforcement 
     activities. CBO then adjusted the ROIs to reflect both direct 
     revenues and protected revenues, increasing the peak ROI from 
     6.4 to 7.1.
       Second, CBO's current methods allow for positive 
     interaction between enforcement spending and other IRS 
     funding. That is, CBO accounts for ways in which increased 
     capabilities, such as more digitization of taxpayers' 
     information and greater visibility of income flows, can 
     increase the productivity of enforcement activities.
       Third, this analysis reflects a longer time frame for 
     receiving enforcement revenues because of the complexity of 
     audits associated with high-wealth individuals, large 
     corporations, and partnerships. Taxpayers with greater 
     resources may be more likely to appeal assessments or to 
     litigate their disputes in the U.S. Tax Court, delaying the 
     receipt of assessed taxes. As a result, revenues from some 
     audits will not be received until later than CBO estimated in 
     its July 2020 analysis.
       Sources of Uncertainty. The change in revenues resulting 
     from an increase in the IRS's funding could be different from 
     CBO's estimate. It depends on the IRS's ability to hire 
     experienced candidates, changes in voluntary compliance, and 
     the interaction of enforcement funding with the IRS's other 
     capabilities.
       The IRS intends to hire mid- and senior-level people with 
     private sector experience who will not require a great deal 
     of training to become productive. But it might not be able to 
     hire its desired mix of candidates. If it hired less 
     experienced candidates, it would have to spend more resources 
     training them. Not only would they take longer to become 
     productive, but current staff members would have to devote 
     more time to training them. A related source of uncertainty 
     in CBO's estimate is attrition: If it proved higher than 
     expected, personnel would have fewer years at full 
     productivity.
       An increase in the IRS's funding could signal that the 
     agency was more capable of detecting noncompliance, thus 
     increasing voluntary compliance and revenues. However, if 
     there were fewer noncompliant taxpayers to audit, the ROIs 
     from the IRS's enforcement activities would drop, and the 
     direct revenues from increased enforcement would be lower 
     than CBO estimated.
       Finally, it is unclear how much the greater information 
     reporting or the increased IRS spending in areas other than 
     enforcement (such as technology) could improve examiners' 
     productivity. Greater nonenforcement spending might increase 
     overall revenues but decrease ROIs--for example, if improved 
     services for taxpayers enabled those taxpayers to more 
     accurately determine their tax liability, reducing the pool 
     of noncompliant taxpayers to audit.


                          Effects on Taxpayers

       The proposed increase in spending on the IRS's enforcement 
     activities would result in higher audit rates than those 
     underlying CBO's baseline budget projections. Between 2010 
     and 2018, the audit rate for higher-income taxpayers fell, 
     while the audit rate for lower-income taxpayers remained 
     fairly stable. In CBO's baseline projections, the overall 
     audit rate declines, resulting in lower audit rates for both 
     higher-income and lower-income taxpayers. The proposal, by 
     contrast, would return audit rates to the levels of about 10 
     years ago; the rate would rise for all taxpayers, but higher-
     income taxpayers would face the largest increase. In 
     addition, the Administration's policies would focus 
     additional IRS resources on enforcement activity aimed at 
     high-wealth taxpayers, large corporations, and partnerships. 
     CBO estimates that if the proposals were enacted, tax 
     compliance would be improved, and more households would meet 
     their obligation under the law.
       Higher audit rates would probably also result in some 
     audits of taxpayers who would later be determined not to owe 
     additional taxes. However, the Administration's proposal for 
     more information reporting, as well as additional spending on 
     IRS technology, might reduce the burden on compliant 
     taxpayers by allowing the IRS to better target noncom pliant 
     ones and to reduce the number of audits that resulted in no 
     change in tax assessment.

  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the 
gentlewoman from New York (Ms. Malliotakis).
  Ms. MALLIOTAKIS. Mr. Speaker, at a time when we should be tightening 
our belts, Democrats plan to spend $80 billion on 87,000 IRS agents, 
doubling the size of the department.
  This is meant to nickel-and-dime, audit, and harass America's small 
businesses and families, who they know cannot afford the legal fees to 
fight this army.
  Mr. Speaker, 87,000 IRS agents but we only have 20,000 Border Patrol 
agents and an unprecedented crisis with terrorists, convicted 
criminals, and illegal immigrants crossing, in addition to fentanyl. We 
only have 5,000 drug enforcement agents to stop traffickers who are 
peddling this poison to our kids, the number one killer of young 
Americans.
  Mr. Speaker, 87,000 IRS agents is more than twice the size of the FBI 
and more than the entire staff of the Department of Justice.
  We know that our colleagues on the other side love taxes, spending, 
Big Government, and bureaucracy, but the American people don't. That is 
why we should be voting ``yes'' on this legislation today.
  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentleman from 
California (Mr. Gomez), not only a very capable member of the committee 
but, last week, during those 4 days here of utter chaos, he carried 
that child around this Chamber. During those 4 days, I think the child 
grew by 2 inches. That is how long we were there.
  Mr. GOMEZ. Mr. Speaker, in 2017, Republicans handed out tax breaks 
for the largest corporations and the ultrawealthy, including Donald 
Trump, who paid zero Federal income tax in 2020 and left the Presidency 
without a single audit.
  What we were trying to do was make it a fairer tax system where the 
ultrawealthy were actually paying their fair share, which, as we saw 
through the simple release of those tax returns for the President of 
the United States, there were some years he paid zero. He was less 
likely to be audited than somebody getting the earned income child tax 
credit.
  This is something that we need to fight against.
  We want to make sure that our colleagues on the other side of the 
aisle understand that it is not just about the ultrawealthy. It is 
about working-class Americans. It is a shame that my colleagues on the 
other side of the aisle care more about those who have higher income, 
those who can hire lawyers that can get them out of paying taxes, but 
we should really have a tax system that benefits everybody.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the 
gentlewoman from Texas (Ms. De La Cruz).
  Ms. DE LA CRUZ. Mr. Speaker, I am proud to stand here today as a 
single mother and a small business owner in support of the Family and 
Small Business Taxpayer Protection Act.
  One of the most outrageous provisions in the Democrats' hyperpartisan 
Inflation Reduction Act was giving the IRS $72 billion to hire an 
additional 87,000 agents. Look, the hiring of 87,000 new IRS agents 
only squeezes American taxpayers, including small business owners like 
myself, the backbone of our communities.
  My colleagues on the other side, let me tell you this: I live and 
work and now represent a border district that houses a Border Patrol 
sector. They need feet on the ground. They have the same number of 
agents on the ground as compared to 3 years ago. Why aren't you 
fighting that hard for these agents?
  The Biden administration will tell you that they have increased 
agents, but they have only increased agents in the processing and 
administration, which ultimately has led to the mental health 
deterioration.
  The American people deserve a government that works for them, not 
against them.
  The SPEAKER pro tempore. Members are reminded to direct their remarks 
to the Chair.
  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentlewoman from Texas 
(Ms. Jackson Lee).
  Ms. JACKSON LEE. Mr. Speaker, let me rename this legislation to the 
billionaire tax cheats happy days are here again because that is simply 
what this bill is about.

[[Page H92]]

  I know my constituents are in one of the difficult districts in the 
Nation, and I realize that small businesses in my district, those who 
are getting earned income tax credit, they want refunds. They can't get 
them if the phones are not being answered and there are not enough 
staff to help them get the refunds that will help them propel their 
small business into the next year.
  Then, of course, Mr. Speaker, what about the lady who was trying to 
close a real estate deal, and there was no one at the office? That 
created a $68,000 tax burden because the tax office was not available 
to assist.
  We need to provide those workers to help Americans, not to create tax 
cheats.
  This legislation is deserving of opposition because we as Democrats 
are trying to make the IRS work for working families, get their 
refunds, get their dollars, help them propel into the next year, and be 
better for the moneys that they deserve to get back.
  Vote ``no'' on the underlying legislation.
  Mr. Speaker, I rise in strong opposition to H.R. 23, the Family and 
Small Business Taxpayer Protection Act. This bill would rescind $72 
billion of the $79.6 billion appropriated to the Internal Revenue 
Service to refine its services and technology and reform its 
enforcement practices of the federal tax code. The passage of H.R. 23 
would widen the already massive tax gap and unfairly relieve the 
wealthiest 1% of Americans from paying their fair share of taxes.
  The historic passage of the Inflation Reeducation Act under the 
leadership of Speaker Pelosi and signed by President Biden authorized 
$79.6 billion to allow the Internal Revenue Service to bolster taxpayer 
services while firmly and fairly enforcing the federal tax code.
  Through the implementation of the IRA, we continue to help the 
millions of Americans who most depend on federal government assistance 
and who contribute disproportionately to the federal revenues that pay 
for our government to operate.
  $45.6 billion of the authorized funds included in the Inflation 
Reduction Act were allocated for tax enforcement activities, including 
hiring more enforcement agents, providing legal support, and investing 
in investigating technologies.
  These funds are necessary to bridge the unjust tax gap that Americans 
have been subject to for generations and will continue to endure under 
Republican leadership.
  The entirety of the $79.6 billion is critical to cracking down on 
ultra-rich and corporate tax evaders who have avoided paying their fair 
share of taxes for years.
  The passage of this bill would dismantle key components of the 
Inflation Reduction Act that have injected fairness into the 
enforcement of our tax system.
  The IRA reduced rising costs for hardworking middle-class and working 
class families and ensured that taxpayers are not left to foot the bill 
for ealthy tax cheats--both of which would be erased with the passage 
of this bill.
  These unfair tax practices have gone on for far too long.
  I urge all my colleagues to oppose this bill and see it for what it 
truly is:
  an effort by Republicans to give tax breaks to the ultra-rich and the 
corporations who fund their campaigns, and
  an effort to continue carrying out their distorted notion of America 
by decimating the programs set in place to help the Americans who 
depend on government assistance the most.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield 1 minute to the gentleman 
from New York (Mr. Lawler).
  Mr. LAWLER. Mr. Speaker, only in Washington can one defend doubling 
the size of the IRS and spending $80 billion to hire 87,000 new IRS 
agents.
  According to my friends across the aisle, that is a good thing 
because the billionaires and the millionaires don't pay their fair 
share. Yet, according to the IRS, the top 25 percent of income earners 
pay 89 percent of all income taxes.
  Does anyone really believe that the 87,000 new IRS agents and 
employees are going to really stop there? Of course not.
  How else will the Democrats fund their out-of-control and reckless 
spending? There aren't enough billionaires and millionaires in the 
United States to pay for it.
  My friends on the other side will do what they always do. They will 
target hardworking taxpayers, families, and small businesses that are 
the lifeblood of our economy. It has to stop.
  Coming from a State like New York, we need to cut taxes. We need to 
reduce the cost of living and make it more affordable for our 
hardworking families.
  Mr. Speaker, I proudly support this legislation and urge all of my 
colleagues to vote ``yes'' and end the 87,000 new IRS agents that are 
going to terrorize hardworking Americans.

                              {time}  2030

  Mr. NEAL. Mr. Speaker, I yield 1 minute to the gentleman from 
California (Mr. Sherman), who is a CPA, I believe.
  Mr. SHERMAN. Mr. Speaker, for 3 days and 3 long nights, every class 
of Republican came to this floor to argue about which of them hated the 
national debt more. Now, as the first thing, they bring forth a bill 
that will increase the national debt by $1.6 trillion, according to six 
bipartisan Secretaries of the Treasury.
  Working people can't evade taxes. They get W-2s and 1099s.
  Republicans support this bill, because every time a billionaire 
successfully cheats on his taxes, a member of the Freedom Caucus earns 
his wings.
  As co-chair of the bipartisan CPA Caucus, and former head of the 
second largest tax agency in America, I say we need staff to put the 
Service back into the Internal Revenue Service.
  One employee for every 2,000 tax returns filed, that is the staffing 
level that Ronald Reagan insisted upon. It is the level Democrats would 
restore.
  Trump took outrageous positions on his returns, and counted on a 
light audit. Whereas Ronald Reagan paid his taxes and staffed the IRS.
  Don't make honest taxpayers feel like suckers. Stand with Ronald 
Reagan and vote ``No.''
  Mr. SMITH of Nebraska. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise with concern about some of these points that have 
been raised. I think we have heard it from both sides that the IRS is 
not answering the phone like they should, to actually serve the 
taxpayers, taxpayers who want to do the right thing.
  It is conceivable that there would be taxpayers overpaying as well 
because of the complexity in the tax code, and yet the record shows 
over the years that there have been innocent taxpayers, taxpayers who 
already paid what they owed, who were still audited and were considered 
guilty until they proved themselves innocent. To me, that is a huge 
problem.
  We just heard that there is concern about the debt, and yet the 
answer is just more government employees, in fact, more than double of 
what the current number of employees are. I have huge concerns about 
that, and that is why I think we need to vote for this bill, get the 
President and the Senate to agree to this, and work together to focus 
on customer service issues that everyone knows are a concern at the 
IRS.
  I hope that, again, this use of technology can really lead the way 
with a goal of customer service, rather than just hiring more full-time 
equivalent employees. I don't think that will actually result in the 
efficiencies that some are claiming would supposedly raise the revenue 
that it would.
  I just think we need to adopt this bill, get this passed, and come 
together after that, realizing that we can and should expect the IRS to 
do better.
  Mr. Speaker, I reserve the balance of my time.
  Mr. NEAL. Mr. Speaker, as my friend, the gentleman from Nebraska 
pointed out, with the Presidential audit system, Joe Biden overpaid his 
taxes. I hope the Record will reflect that, that the Democratic 
President overpaid his taxes, and the IRS wisely made sure that he had 
the proper refund.
  Mr. Speaker, I yield 1 minute to the gentlewoman from Ohio (Ms. 
Kaptur), the longest serving woman in the history of Congress.
  Ms. KAPTUR. Mr. Speaker, I rise in opposition to this Republican 
green light to tax cheaters, billionaires, and giant corporations that 
do not pay their fair share of taxes.
  The average working person in our country pays a rate of about 25 
percent. Billionaires pay under 5 percent. Every citizen and 
corporation should take a pledge of allegiance to pay their fair share 
of taxes. But Amazon, Chevron, AIG, and even Coca-Cola shirk their duty 
to liberty. Jeff Bezos, Elon Musk, and Charles Koch prosper under 
liberty's flag but cheat on their taxes.

[[Page H93]]

  In what world is it fair that those in the top brackets can cheat the 
system while hardworking Americans pay their fair share every day?
  I can assure you, staff in our offices have answered over a thousand 
calls since 2020 because the IRS doesn't have enough agents to do the 
job. Properly funding the IRS will help to reduce the deficit, average 
Americans will get answers and help, and tax cheaters will finally pay 
their fair share.
  Mr. Speaker, I include in the Record a laundry list of tax cheaters.
       Amazon, Exxon Mobil, AT&T, Microsoft, Verizon, Chevron, 
     Bank of America, UPS, Nike, Coca Cola, Charter 
     Communications, AIG.
       Jeff Bezos, Mark Zuckerberg, Bill Gates, Michael Bloomberg, 
     Larry Page, Sergey Brin, Steve Ballmer, Elon Musk, Rob 
     Walton, Charles Koch.

  Mr. NEAL. Mr. Speaker, I yield myself the balance of my time for the 
purpose of closing.
  Mr. Speaker, this has been an edifying debate. But as Harry Truman 
noted, let's just talk about the facts. Let's debunk the argument that 
we are hiring 87,000 armed IRS agents to go knocking on doors in the 
middle of the night.
  This is a substantial investment in technology. This is a substantial 
investment in customer service. Yes, the $80 billion is over 10 years. 
That is $8 billion a year to improve customer service. That is what we 
are talking about.
  At least 8,000 agents retire from the IRS every year. We are simply 
replacing them. You know, in our school systems back home, when 200 
teachers retire, we replace 200 teachers. That is what we are doing 
here with the IRS.
  They make this preposterous argument that all of a sudden, next week, 
87,000 armed--because you always have to use the language that is 
incendiary enough to get people worked up around here--that 87,000 
armed agents in the dark of night will be hounding innocent taxpayers, 
despite what Janet Yellen said about no taxpayer making under $400,000 
a year is going to be targeted.
  Mr. Rossotti, the former IRS commissioner, not me, said at least $574 
billion a year goes uncollected. He is a Democrat. A Republican IRS 
commissioner, Mr. Rettig, who we worked with, said it might be a 
trillion dollars a year that goes uncollected, a Donald Trump 
appointee, who stated that and raised that issue a number of times in 
front of the Committee on Ways and Means.
  Let me make a point that I raised earlier. Tax compliance in a 
representative democracy is a fundamental commitment to civilization 
and first-class services.
  So by not collecting this revenue, are we going to say down the road, 
well, maybe we will cut Social Security; maybe we will cut Medicare; 
maybe we will cut Medicaid; or maybe we will cut the American military.
  Now, we all know that in this discussion that the facts are very 
clear here. They have been upset with the IRS for a long period of 
time. We all remember the Lois Lerner episode, even though the facts in 
that case pointed out that the advocates on the right and the left were 
audited at the same rate. That is a fact.
  So as we close this argument out, let's stand up for the honest 
taxpayers in America and make sure that the IRS that currently cracks 
down on the EITC will be able to actually address some of the 
complexities of modern tax law, which we all agree, by the way, the 
system is far too complex, but I have been through that argument many 
times here, as well.
  This fear-mongering that you are hearing tonight about upgrading the 
technology and software investments at the IRS for the purposes of 
modeling for better tax compliance is just that. It is fear-mongering.
  All we want is a set of rules that is applicable to all as it relates 
to tax collection. This is not anything other than simply suggesting 
that there is a fairness that is applied to the Internal Revenue 
Service, so that they might address and make sure that those at the 
very top are complying with the same laws we ask the wage earners 
through withholding to address every single day.
  Thanks for a spirited debate, Mr. Speaker, and to our friends on the 
other side.
  Mr. Speaker, I yield back the balance of my time.
  Mr. SMITH of Nebraska. Mr. Speaker, I yield myself the balance of my 
time.
  Mr. Speaker, I appreciate the conversation that we have had here. I 
think there is fundamental disagreement on what the real solutions need 
to be; although, I think there is agreement that the current customer 
service at the IRS is significantly underperforming.
  Now, in 2019, in a bipartisan fashion, we passed the Taxpayer First 
Act. In fact, our highly respected colleague, the late Representative 
John Lewis, led the way on that, as well. This was about customer 
service and reform at the IRS. Were there benefits from that? COVID got 
in the way.
  I think that does actually beg the question of what have been the 
impacts of COVID on customer service at the IRS.
  Mr. Speaker, I am concerned that when there are resources afforded 
the IRS, they are just not used the way they can and should be, 
especially as it relates to customer service and the honest taxpayers 
that my colleague from Massachusetts references. We want to do 
everything we can when the American people are doing the right thing, 
for the right reasons, and abiding by the law. Yet they would still be 
exposed to having to prove themselves again after they already did with 
voluntary tax compliance. But here comes an audit. I vividly recall the 
fact that in the 1990s, the IRS, as an agency, overstepped.
  In fact, I believe it was President Clinton that even pulled back the 
IRS somewhat because they were going after law-abiding, taxpaying 
Americans who already did everything they were supposed to do.
  That certainly establishes my concern about why we would see 
legislation passed last year that would pretty randomly put forward 
funding that I think will ultimately get in the way of these taxpaying 
Americans who, like I said, already did everything they were supposed 
to do, but yet they have to incur the expense.
  Mr. Speaker, I urge the passage of this bill for good public policy, 
and I yield back the balance of my time.
  Ms. LEE of California. Mr. Speaker, I rise in strong opposition to 
H.R. 23, which would gut the enforcement of our tax laws.
  As part of the Inflation Reduction Act, Democrats fought hard last 
year to help the IRS crack down on wealthy tax cheats like Donald 
Trump.
  But House Republicans want to make sure the IRS remains underfunded, 
understaffed, and unable to catch the top one percent who hide over 20 
percent of their income from the IRS each year.
  Meanwhile, the working people who pay their taxes will wait longer 
for tax refunds and assistance because of these cuts.
  Do not let Republican talking points about IRS funding mislead you. 
This bill will only help tax cheats avoid paying their fair share. 
House Republicans are only protecting their fat cat allies like Donald 
Trump.
  Instead of catering to their billionaire friends, I urge my 
Republican colleagues to prove they actually care about working people 
by voting no on this bill.
  Ms. McCOLLUM. Mr. Speaker, I rise in opposition of H.R. 23, the 
Family and Small Business Taxpayer Protection Act.
  Hard-working families pay 99 percent of the taxes they owe, while the 
uber wealthy, the 1 percent, has the ability to hide more than 20 
percent of their income from the IRS each year. Tonight, the first bill 
I will vote on is designed to help the 1 percent avoid paying their 
fair share. House Republicans are protecting sophisticated tax cheats 
and greedy corporations, and they do so under the guise of cutting the 
budget of the Internal Revenue Service.
  My office has been working with many families who have experienced 
financial hardship while waiting months for the IRS to process their 
tax refunds--which are often thousands of dollars. Why? Because the 
agency has less auditors than in 1954 and tax returns are processed on 
computer systems designed more than 40 years ago. This is a direct 
result of years of attacks and budget cuts by Republicans in Congress 
and the Trump administration.
  Last year, Democrats passed the Inflation Reduction Act which 
includes investments to replace retiring taxpayer service workers and 
update aging technology to increase efficiencies so hardworking 
taxpayers can receive prompt refunds and service.
  Republicans should be helping the Americans waiting on hold for hours 
to get their tax refunds instead of making it easier for tax cheats to 
skip out on paying their fair share.
  Ms. JACKSON LEE. Mr. Speaker, I rise in strong opposition to H.R. 23, 
the Family and

[[Page H94]]

Small Business Taxpayer Protection Act. This bill would rescind $72 
billion of the $79.6 billion appropriated to the Internal Revenue 
Service to refine its services and technology and reform its 
enforcement practices of the federal tax code. The passage of H.R. 23 
would widen the already massive tax gap and unfairly relieve the 
wealthiest 1 percent of Americans from paying their fair share of 
taxes.
  The historic passage of the Inflation Reeducation Act under the 
leadership of Speaker Pelosi and signed by President Biden authorized 
$79.6 billion to allow the Internal Revenue Service to bolster taxpayer 
services while firmly and fairly enforcing the federal tax code.
  Through the implementation of the IRA, we continue to help the 
millions of Americans who most depend on federal government assistance 
and who contribute disproportionately to the federal revenues that pay 
for our government to operate.
  Simply put, Americans who have the least should not be burdened with 
the responsibility to contribute the most. Every American--most 
importantly, the wealthiest among us--must pay what they rightfully owe 
to enable our government to function.
  $45.6 billion of the authorized funds included in the Inflation 
Reduction Act were allocated for tax enforcement activities, including 
hiring more enforcement agents, providing legal support, and investing 
in investigating technologies.
  These funds are necessary to bridge the unjust tax gap that Americans 
have been subject to for generations and will continue to endure under 
Republican leadership.
  The entirety of the $79.6 billion is critical to cracking down on 
ultra-rich and corporate tax evaders who have avoided paying their fair 
share of taxes for years.
  The passage of this bill would dismantle key components of the 
Inflation Reduction Act that have injected fairness into the 
enforcement of our tax system.
  The IRA reduced rising costs for hardworking middle-class families 
and ensured that taxpayers are not left to foot the bill for wealthy 
tax cheats--both of which would be erased with the passage of this 
bill.
  These unfair tax practices have gone on for far too long.
  I urge all my colleagues to oppose this bill and see it for what it 
truly is:
  an effort by Republicans to give tax breaks to the ultra-rich and the 
corporations who fund their campaigns, and
  an effort to continue carrying out their distorted notion of America 
by decimating the programs set in place to help the Americans who 
depend on government assistance the most.
  The SPEAKER pro tempore. All time for debate has expired.
  Pursuant to House Resolution 5, the previous question is ordered on 
the bill.
  The question is on engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


                           Motion to Recommit

  Mr. KILDEE. Mr. Speaker, I have a motion to recommit at the desk.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:
       Mr. Kildee moves to recommit the bill H.R. 23 to the 
     Committee on Ways and Means.
  The material previously referred to by Mr. Kildee is as follows:

       Mr. Kildee moves to recommit H.R. 23 to the Committee on 
     Ways and Means with instructions to report the same back to 
     the House forthwith with the following amendment:
       Add at the end the following:

     SEC. 3. PREVENTION OF INFLATION INCREASE.

       Section 2 shall not apply if the Secretary of the Treasury 
     certifies that such section will increase inflation for the 
     American people.


 =========================== NOTE =========================== 

  
  January 9, 2023, on page H94, in the second column, the 
following appeared: The Clerk read as follows: Mr. Kildee moves to 
recommit H.R. 23 to the Committee on Ways and Means with 
instructions to report the same back to the House forthwith with 
the following amendment: Add at the end the following: SEC. 3. 
PREVENTION OF INFLATION INCREASE. Section 2 shall not apply if the 
Secretary of the Treasury certifies that such section will 
increase inflation for the American people. The material 
previously referred to by Mr. KILDEE is as follows: Mr. Kildee 
moves to recommit the bill H.R. 23 to the Committee on Ways and 
Means.
  
  The online version has been corrected to read: The Clerk read as 
follows: Mr. Kildee moves to recommit the bill H.R. 23 to the 
Committee on Ways and Means. The material previously referred to 
by Mr. KILDEE is as follows: Mr. Kildee moves to recommit H.R. 23 
to the Committee on Ways and Means with instructions to report the 
same back to the House forthwith with the following amendment: Add 
at the end the following: SEC. 3. PREVENTION OF INFLATION 
INCREASE. Section 2 shall not apply if the Secretary of the 
Treasury certifies that such section will increase inflation for 
the American people.


 ========================= END NOTE ========================= 


  The SPEAKER pro tempore. Pursuant to clause 2(b) of rule XIX, the 
previous question is ordered on the motion to recommit.
  The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. NEAL. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to section 8 of rule XX, further 
proceedings on this question are postponed.

                          ____________________