A group of Senate Republicans sent a letter to the Trump administration on Tuesday expressing concerns that an Internal Revenue Service (IRS) compliance unit instituted under former President Joe Biden was “motivated by ideological considerations” and may be “targeting” small businesses in the United States.
In Tuesday’s letter, Sen. Marsha Blackburn (R-Tenn.), Sen. Steve Daines (R-Mont.), Sen. James Lankford (R-Okla.), and Senate Majority Whip John Barasso (R-Wyo.) asked Deputy Treasury Secretary Michael Faulkender for answers regarding the IRS pass-through compliance unit operating under the Large Business and International division.
The senators wrote, “We are concerned that this initiative, established under the previous administration, appears to have been motivated by ideological considerations rather than the principles of sound tax administration.”
“The creation of an enforcement unit specifically focused on pass-through entities raises legitimate concerns about whether the focus is on improving compliance or simply targeting specific business structures based on institutional prejudice,” the senators added. “This type of targeting is problematic no matter the size of the business, but is especially challenging for smaller businesses who have fewer resources to navigate such audits.”
READ MORE:45,000 IRS agents facing potential layoffs: Report
The Republican senators warned that most small businesses in the United States do not have the resources to “navigate these intensive audits” and that the audits could create “disproportionate compliance burdens” for small businesses. The senators added that taxpayers making under $400,000 were previously assured that they would “not face increased enforcement relative to historical levels.”
According to The Daily Caller, the IRS pass-through compliance unit highlighted in Tuesday’s letter was established during the last months of the Biden-Harris administration.
At the time of the IRS unit’s establishment last September, former IRS Commissioner Danny Werfel claimed that the compliance unit would “ensure the IRS holds the nation’s wealthiest filers accountable to pay the full amount of what they owe.”
“We are honing-in on areas where we believe non-compliance among our wealthiest filers has proliferated over the last decade of IRS budget cuts, and pass-throughs are high on our list of concerns,” Werfel said. “This new unit will leverage Inflation Reduction Act funding to disrupt efforts by certain large partnerships to use pass-throughs to intentionally shield income to avoid paying the taxes they owe.”
