Morning Wire XX
[0] Tax season is in full swing, and many Americans are unsure about how recent changes and new funding for the IRS will affect them.
[1] In this episode of Morning Wire, we talk about what has and hasn't changed with the IRS and what it means for the average American.
[2] I'm Daily Wire editor -in -chief John Bickley with Georgia Howe.
[3] It's April 2nd, and this is a Sunday extra edition of Morning Wire.
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[13] Here to talk about the impact of $80 billion in new funding to the IRS and some recent changes to tax code is Brandon Arnold, executive VP of the National Taxpayers Union.
[14] Welcome, Brandon.
[15] So millions of Americans are in the middle of filing their taxes right now.
[16] What is new with the IRS this year?
[17] Well, this year, thankfully the IRS has finally put some of these resources that we've sent them to good use.
[18] They've hired 5 ,000 new people to answer the phones so that unfortunate situation that so many Americans faced last filing season, where they only got through to an IRS agent about 10 or 11 % of the time, that has been improved dramatically.
[19] Now, unfortunately, that's about the only positive thing that I can say about what's taking place at the IRS during tax filing season.
[20] Otherwise, they remain very, very dysfunctional, very hesitant to make any kind of modernization efforts.
[21] We are still waiting for a plan for the IRS to show us exactly how they're going to spend those additional 80 billion taxpayer dollars that they received in the Inflation Reduction Act last year.
[22] Now, the IRS was supposed to produce a comprehensive report on how they would spend that money, that $80 billion.
[23] They said they completed by February 17th.
[24] Have they produced that yet?
[25] A few weeks ago, they said, we'll get that report to you in a few weeks.
[26] And just last week, Secretary Yellen was on Capitol Hill saying, we'll get that report to you in a few weeks.
[27] But they have yet to produce a plan as to how they're going to spend them.
[28] We know they're going to spend a lot on audits, but how exactly are those audits going to be out?
[29] allocated.
[30] There are some important things that need to take place, and it's a real question of how they're going to prioritize and use those funds.
[31] The software systems that their IT platforms are built off of are literally decades old.
[32] They have difficulties when they have system failures, which happen frequently.
[33] So they absolutely need to update these platforms.
[34] They need to go to more sophisticated technology systems that, for whatever reason, the IRS has refused to modernize.
[35] Now, President Biden has promised that anyone making less than 400 ,000 will not pay higher taxes, yet it seems Americans are facing more taxes today than ever before.
[36] What is the reality for taxpayers?
[37] Taxpayers are going to see higher taxes if the Biden administration gets their way.
[38] Fortunately, we have a Republican House that can block a lot of these tax increase proposals.
[39] But the fact of the matter is, you know, economists, left, right, center, you name it, know that when you raise taxes, particularly on businesses, corporations, They may seem like these nameless, faceless entities with bottomless pits of gold coins.
[40] But indeed, when you raise taxes on those entities, a lot of times those taxes are passed down to consumers in the form of higher prices.
[41] They're passed down to employees in the form of lower wages.
[42] So we are paying a price for those higher taxes.
[43] It's just the way the economy works.
[44] You mentioned Treasury Secretary Janet Yellen testifying before Congress last week.
[45] She confirmed in that testimony that 90 % of new.
[46] audits under the Inflation Act would continue to fall on small businesses and families earning less than $400 ,000, correct?
[47] Yeah, she kind of got caught in an awkward spot because they've chosen their words very carefully at Treasury, of course, to mislead people.
[48] And that is saying we're not going to increase the rate of audits for people making less than $400 ,000 a year.
[49] Well, let's be clear, the vast majority of people make less than $400 ,000 a year.
[50] Only about 2 or 3 % of Americans make more than that.
[51] So if you increase the sheer number of audits that are taking place, even if you hold that rate at about 90 % firm, there's going to be more audits.
[52] People are going to be audited more frequently.
[53] Does Congress need to get involved?
[54] Do they need to bring in IRS officials and get some hard answers on where some of the allocations of these funds are going?
[55] Yeah, absolutely.
[56] I mean, now that the Republicans have control of the House, we need more oversight of what's taking place there.
[57] And that means tracking each and every dollar, these $80 billion that are going to the IRS.
[58] and finding out how they're going to be spent.
[59] You know, the IRS just asked for an additional $43 billion on top of that $80 billion.
[60] What the heck do they need all this additional money for?
[61] I know there are some serious needs that need to be addressed, but at some point it just gets ridiculous.
[62] They can only audit so many people.
[63] Are we all going to be under audit at some point?
[64] So the IRS needs additional scrutiny.
[65] They need additional transparency.
[66] We need additional oversight now that $80 billion is going to be moving from taxpayers' wallets.
[67] over to the IRS.
[68] Now at the beginning of 2022, the Biden administration passed a new tax rule relating to payment processing apps.
[69] What's the status of that new rule?
[70] So what took place last year is they lowered a threshold for what is called the 1099K form.
[71] So this is any transaction that takes place through third party entities.
[72] So if you went to Ticketmaster and used their secondhand marketplace to buy or sell some concert tickets, then you may have triggered that $600 threshold.
[73] It used to be all the way up at $20 ,000.
[74] So very few people besides business entities, very few people actually ran into that.
[75] But now with this more aggressive, much lower threshold, more and more people are running into this.
[76] And it's creating a lot of confusion.
[77] It's going to create even more confusion.
[78] Fortunately, the IRS hit the pause button for one year.
[79] So we have a respite for 2023, but come the beginning of 2024, many people are going to be getting these forms that say, of business on Stubhop or by using Venmo or PayPal or whatever third -party entity, sometimes that is a taxable transaction.
[80] Many times it's not.
[81] If you sold some old furniture or textbooks or toys that you had lying around in your basement and you sold those things at a loss, even if you hit that $600 threshold, you are not liable to pay taxes on that.
[82] Now, I know that, you know that, but a lot of people that get that form may be confused and may just automatically assume that that $700, figure, whatever that number is, needs to be reported on their 1040, and they need to pay taxes on it.
[83] So we're going to see even more confusion as this rule takes effect next year.
[84] It's already created a great deal of confusion.
[85] It's already created a lot of unnecessary paperwork and headaches for individuals and businesses alike.
[86] It's a huge, huge problem.
[87] Final question.
[88] We've heard a lot from the Biden administration that the top 1 % don't pay their fair share.
[89] President Biden actually recently said in a tweet that the average tax billionaires pay is just 3%, that was later fact -checked, are billionaires actually paying their fair share of taxes?
[90] Well, a lot of times when you see these extraordinarily low tax rates for billionaires, they're really playing with the numbers.
[91] And what they often do is include unrealized gains on capital.
[92] So that's a fancy way of saying, let's say you live in a very expensive house because you're a billionaire.
[93] That house increases in value.
[94] Now, you didn't get any additional funds that went into your checking account as a result of that, but you did increase your net worth.
[95] Well, the way they drive down that income tax number is by saying those were all dollars that went into your checking account effectively and you weren't paying taxes on them and that's unfair.
[96] So it's really, really gaming the system here because what we do in this country is we tax gains when they're realized.
[97] So if you sold that house, then you could be subject potentially for capital gains taxes.
[98] If you sold those stocks, that artwork or so forth, then you would have to pay taxes on it.
[99] But you can't just simply say because somebody's house went up in value that they're somehow avoiding taxes or skirting their tax liability because they experience those gains.
[100] Until they sell that, it really doesn't tend to benefit them to the extent that they would have you believe.
[101] Well, Brandon, thanks so much for joining us.
[102] That was the National Taxpayer Union's Brandon Arnold, and this has been an extra edition of Morning Wire.