This week on Tuesday, President Biden met with the Congress to negotiate on whether to raise the debt ceiling. What hangs in the balance is 87,000 new IRS agents. Whatever happens in these negotiations, the outcome is going to affect your life. I am going to explain how, this week on Wolves and Finance.
Just to give you an idea of the significance of 87,000 IRS agents, that is more people than can fit in most football stadiums. So, imagine the largest football stadium you know. Now imagine it full of IRS agents. That is what we are talking about today.
Let us start with how these 87,000 IRS agents came about. They were funded last year as part of the Inflation Reduction Act on Aug 16, 2022. The Inflation Reduction Act was a spending bill that was passed to fight growing inflation. Now that we are almost a year since the bill was enacted, it does not seem to be working. I do not know if you have been to a store lately, but everything seems to be more expensive. It makes me wonder if they actually talked with an economist before passing this bill. Does anyone actually think that more government spending is going to reduce inflation?
Part of the spending included $80B for the IRS. Just to be clear, I do not see this as a Republican or Democrat issue. The IRS affects everyone, and there were a lot of Democrats that were uneasy that this got put in the bill. The increase came from a Treasury report that laid out a hiring plan for 87,000 IRS agents. Here are a couple facts:
- These are new IRS agents. Some people have argued that IRS agents are retiring and this is necessary to fill the leaving positions. But that is not true. These are new positions on top of all the IRS agents that already exist. They are growing the size of the IRS. If they wanted to simply fill old positions, they could have just left the budget the same and it would not have cost anything.
- This is a 66% increase in the budget of the IRS. This is a huge increase. It brings the IRS budget from around $12B per year to roughly $20B per year. Was this really necessary? I want to know, who woke up one morning and thought to themselves, “You know which Federal Agency needs to be 66% larger… the IRS!” It makes no sense.
- The White House claims this will not affect taxpayers making less than 400k per year. This is false, and I will explain why. When the bill was being drafted, it was proposed to put language in the law to guarantee that the IRS could not increase enforcement against people making less than 400k per year. The politicians refused to include it in the bill, and left it as an unofficial talking point. What does that tell you? It tells me that it was a lie.
Just last month, the IRS published a new strategic plan showing how they were going to spend the new $80B. In the plan, they specify that they are going to target individuals making more than $10M per year. So, let us look at a comparison, there are 30,000 individuals making more than $10M per year in the US, and there are 87,000 new agents. This does not even make sense. Does each person need multiple auditors? Now, some of these agents are also going to be used in auditing large businesses. But even assuming that, the numbers still do not make sense. Given all these facts: the enormous size of the increase and the fact they would not include guarantees in the bill, you have to assume they are coming for everyone.
We have additional facts to back this up. We know that the IRS has historically come after poor people. Here is a chart of the IRS Rate of Income Tax Audits of the lowest income wage earners versus everyone else. The difference is enormous. The IRS has always been targeting poor people. This is because the IRS likes to audit people who claim the earned income credit which is easy for the IRS to audit and a lot of people make mistakes claiming it. More importantly, poor people do not have the resources to fight back and are easy wins for the IRS. The evidence shows the IRS targets poor people… a lot, even up until last year. Do you think the IRS is suddenly going to change? I doubt it and now they have 87,000 more agents to come after you.
But I think there are bigger problems that most people are not aware of. There is a big difference between tax court and regular court. The rules are different. Most people think that in America you are “Innocent until proven guilty.” That is not true in tax court. The opposite is true. In tax court you are “guilty until proven innocent.” You have a lot less rights in tax court. Also, you do not have the right to a jury trial. There is only the judge. This judge is assuming you are guilty unless you can prove otherwise.
I need to emphasize this point. If you are accused of violating tax law, you are brought into tax court and assumed guilty. You have to prove your innocence. In a criminal court, it is the opposite. You are assumed innocent, and the prosecution has to prove your guilt. This is the reason why it is so important to keep your receipts for your taxes. It is not for the IRS. It is for tax court. Because if you are ever brought before a judge, you want to be able to pull out your receipts and prove to the judge that you are innocent of whatever charges they are bringing against you.
So, take a step back and look at the big picture of what is happening with this legislation. All around the US, prosecutors are bringing fewer charges in criminal court. They are letting more criminals out of prison. And at the same time, we are increasing the IRS budget by 66%. So, at the same time that the government is prosecuting fewer people in criminal court, they are trying to increase the number of trials in tax court where people have less rights. This is a massive power grab by the government to take away your rights to a fair trial. Imagine a situation where the government just makes up a false allegation against you, drags you in front of a judge, and you are assumed guilty. If you cannot come up with enough evidence to prove your innocence, you are sent to prison.
Now I know some of you are going to think I have gone off into conspiracy theory land. But before you believe that the government has your best interest at heart, wait until you hear this. The IRS has been buying guns and ammunition. A lot of guns. I think this tells you a lot about their intentions.
In 2020, an organization called OpenTheBooks released a report on “The Militarization of The US Executive Agencies.” In this report, they show the IRS spent $21.3M on guns, ammunition and military-style equipment since 2006. The IRS arsenal included 4,600 guns and five million rounds of ammunition. The guns include 3,282 pistols, 621 shotguns, 539 military-style rifles, 15 fully automatic weapons and four revolvers.
But that was in 2020 before the pandemic. The IRS has bought even more guns since the pandemic. OpenTheBooks released a new report just last month with updated numbers. In fact, the IRS purchased more weapons in 2020 and 2021 than any previous year, an increase of $10M.
So, I am an accountant and a CPA. So, I know a little about how the IRS works. All the people who work at the IRS collecting taxes, they do not need guns. They are accountants. How the IRS works is through paperwork. They send you a letter that you did not pay your taxes. You send in your receipts. If they do not agree with your evidence, they send you a notice they are fining you. If you do not pay, they have some very powerful tools to come after you. They can garnish your wages. They can freeze your bank accounts. They can seize your property. There are some really good accountants that work at the IRS and they do not need guns. There is no reason why an accountant needs a fully automatic machine gun.
There is an old accounting saying, “If you want to know what someone is up to, watch what they are spending money on.” All these gun purchases make the motives of the IRS suspicious. What is really disturbing, is the IRS is not the only federal agency buying guns. In the same report by OpenTheBooks, they reveal that HHS (Health and Human Services) has spent even more money buying guns than the IRS. Specifically, NIH (the National Institute of Health) that was formerly headed by Dr. Fauci has its own police force with 105 officers, bigger than 95% of the police departments across the US. The HHS Gun Locker currently includes 1300 guns, shotguns, sub-machine guns and 200 fully automatic firearms. That is 13 times the number of machine guns the IRS has. I find this extremely curious. I though the NIH was just a bunch of doctors. Why do doctors need machine guns? Are they giving people treatment at gunpoint? Is this part of the doctor’s oath that I am not aware of? Someone please help me understand this. Put in the comment section down below if you can think of any reason why a bunch of doctors need machine guns to do their job at NIH. Because I cannot think of any.
So, when you put all these pieces together, the Inflation Reduction Act was a power grab by the Federal Government. It was a massive increase in the IRS with 87,000 new agents. They are buying more guns and they are planning on trying more cases in tax court where you have less rights. This is not a conspiracy theory. This is all facts. And this is being paid for with your money. Your tax dollars are paying for more government agents to attack you. I also find it ironic that the politicians that are screaming the loudest about taking away people’s guns, have no problem with buying fully automatic machine guns for the IRS.
If you do not think the IRS would go after political enemies, they already did. This might surprise you, but this all goes back to when Obama was president. If you remember, Obama ran for re-election in 2012 against Mitt Romney. At the time, Obama was struggling in the polls largely due to the emergence of what became known as the “Tea Party.” The Tea Party began forming non-profit organizations to campaign against Obama. Lois Lerner was the Director of the Exempt Organizations Unit at the IRS. This is the division that handles non-profits. She admitted on a call with reporters that her staff had targeted Tea Party groups. They either denied their applications for Tax-exempt status, or delayed the process so long that they were not able to participate in the election campaign. This is by the IRS own admission. Obama successfully won re-election. Lois Lerner resigned. The Obama led FBI investigated the claims of election interference and found that there was no wrong doing. Now I find it very confusing that the FBI could not find any evidence of wrong doing, when the IRS already admitted to wrong doing. Despite the FBI’s obviously corrupt investigation, this is a clear example that the IRS has already been weaponized to go after political opponents. I think it is foolish to think it will not happen again.
This treatment is continuing under Biden. Two months ago, journalist Matt Taibbi testified in front of congress about his release of the Twitter Files showing massive government corruption. The day before he was scheduled to testify, an IRS agent showed up at his home to inform him he was going to be audited. The IRS was re-opening his tax form from 2018 that had already previously been accepted, as well as his recent 2021 return. So, he previously sent in his return, it was accepted, and now the IRS is saying “Just kidding, we are re-opening this to investigate you.” To put this in perspective, Matt Taibbi does not owe any money from these tax forms. He gets a tax refund. There is no reason for him to be audited. What is going on here? Just like the previous IRS attacks by Lois Lerner, it appears the IRS is trying to intimidate a journalist from reporting on government corruption. The Congressional Committee on the Weaponization of the Government has sent a letter to the IRS demanding an explanation.
So, what do we do now? First of all, share this video. Part of the problem is that a lot of people just are not aware of any of this. Second, this debate over raising the debt ceiling is an opportunity. We can fix this. We can simply not hire 87,000 new IRS agents, and we will save $80B. This is your money. Let us take it back. I want to share some advice as an accountant. In order to fix a problem, you don’t always have to throw more money at it. In this case, there is another alternative. We could simplify the tax code. You know how when you file your taxes each year, there are so many forms to fill out. We could just make it simpler. Cut the number of forms in half. Make them easier. Close the tax loopholes. If we had half the forms to fill out, you would need half the IRS agents. We would not have to hire anyone. I just saved you $80B, America. You’re welcome. So, it is my hope that our politicians avoid hitting the debt ceiling by not hiring 87,000 IRS agents.
SOURCES
Treasury Report – 87,000 IRS Agent Hiring Plan
https://home.treasury.gov/system/files/136/The-American-Families-Plan-Tax-Compliance-Agenda.pdf
Syracuse University – IRS Targets Poor People
https://trac.syr.edu/reports/706/
IRS Strategic Plan FY2023-2031
https://www.irs.gov/pub/irs-pdf/p3744.pdf
Tax Foundation – IRS budget increases 66%
https://taxfoundation.org/irs-budget-increase-technology/
Open the Books report 2020
https://www.openthebooks.com/assets/1/6/Militarization_Data_for_Imaging_FINAL_31.pdf
Open the Books report 2023
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Neither Zach De Gregorio or Wolves and Finance shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.