Biden nominee to head IRS vows no increased audits for households under $400,000

Daniel Werfel pledged Wednesday that if he is confirmed by the Senate to become the next commissioner of the IRS, the tax agency will not use its $80 billion funding boost from Congress to go after households making less than $400,000 per year.

The Biden nominee told lawmakers during his confirmation hearing before the Senate Finance Committee that he is “committed to meeting” a directive from Treasury Secretary Janet Yellen that the Internal Revenue Service will not increase audit rates — relative to historic levels — for small businesses and households bringing in under $400,000.

“Therefore, if I am fortunate enough to be confirmed, the audit and compliance priorities will be focused on enhancing IRS capabilities to ensure America’s highest earners comply with applicable tax laws,” Mr. Werfel said.

His testimony comes amid intense scrutiny from Republicans that Democrats’ funding windfall under their tax-and-climate-spending law — dubbed the Inflation Reduction Act — will hurt middle and lower-income earners. More than half the new money, roughly $46 billion, is intended for tax compliance efforts, which Democrats say will be used to target some of the nation’s wealthiest tax cheats at the individual and corporate levels.

The rest of the funding is meant to bring the IRS into the digital age by upgrading its decades-old technology and chipping away at its backlog of processing tax returns.

“Because the funding lacks any accountability measures or guardrails, the next IRS commissioner shoulders the primary responsibility for outcomes, as well as planning, tracking spending and transparently monitoring outcomes,” said Sen. Mike Crapo, Idaho Republican and the panel’s ranking member. “Given how the funding was conceived, designed and adopted, I am skeptical.”

Mr. Werfel, managing partner at Boston Consulting Group and a former employee of the IRS and the U.S. Office of Management and Budget, sought to assuage such transparency concerns by vowing to disclose details on how the agency spends its influx of $80 billion.