NOW THE REAL FUN BEGINS: The Democrats' big fiscal package is done and dusted, and on its way to get President Joe Biden's signature. But as with lots of large pieces of legislation, the battle over the Inflation Reduction Act — not technically its name , for whatever it's worth — is in many ways just beginning. Republicans didn't take long at all to fling themselves into the public relations battle over the new bill, particularly the sizable increase in funding coming to the IRS. Democrats and other advocates for the IRS have long pushed to boost resources for the IRS — arguing, among other things, that the agency needs more money to better battle wealthy tax cheats. And if you listen to Democrats, that's exactly what that $80 billion in new funding is meant to do. But Republicans say the bill will actually lead to more scrutiny on small business owners and regular taxpayers, and their rhetoric on the matter has been pointed. Democrats and even some more neutral observers have been calling it way over the top, with top Republicans in some cases raising the idea of a new crop of armed IRS agents swarming into communities. (Conservatives have also noted that independent watchdogs have found real issues within the IRS's criminal investigations division.) Pro Tax's Brian Faler sought to distinguish between myth and reality — noting, for instance, that Treasury officials are denying that the Democrats' new bill will fund 87,000 new IRS agents. MORE ON THAT IN A BIT, but first we have to say — there's nothing bad about seeing the continuing love affair between Guster and college basketball. Man, no one ever talks about the Ides of August: Today marks 965 years since a Scottish king named MacBeth was killed in battle, or about five and a half centuries before it inspired a tragedy by William Shakespeare. Let us know all about the palace intrigue. Email: bbecker@politico.com, bfaler@politico.com and teckert@politico.com. You can also reach us on Twitter at @berniebecker3, @tobyeckert, @brian_faler, @POLITICOPro and @Morning_Tax. WHO'S GOING TO BE WORKING AT THE IRS? That 87,000 figure is based on a Treasury projection from last year of how many new employees it would bring on over a decade with that $80 billion in new funding. But many of those staffers wouldn't be revenue agents, and would instead work in other areas where the IRS finds itself constantly playing catch-up, Treasury officials say — like information technology and taxpayer services. Now what Treasury officials can't spell out is just how many of those new employees will be conducting audits and, understandably, how many retired staffers will need to be replaced over 10 years. It's also worth noting that Natasha Sarin, a top Treasury official, said the IRS will produce a detailed report spelling out in more detail how the tax collector will use the extra funding. (That would've been required under the Democrats' bill, before the Senate parliamentarian tossed out that provision.) That report should offer more insight into how the IRS plans to ensure that audit rates for those making under $400,000 don't increase — or, more precisely, that they "will not rise relative to recent years," as Treasury Secretary Janet Yellen has put it. Because at least until then, you kind of have to take Democrats and the IRS's word for it — not something Republicans are interested in doing. But let's be honest: it's unlikely that more details from the Biden administration will assuage all of the concerns coming out of the GOP. And to be fair, the red line at $400,000 could create some tricky spots for the tax collector. It's not like the IRS always knows exactly how much someone makes until it actually completes an audit. Put another way: This could also easily devolve into eye of the beholder territory down the line. For starters, it's not totally clear what Treasury and the IRS mean when they say audit rates won't rise relative to recent years for people making less than $400,000 a year, or won't change compared to historical levels for those making that amount, as Yellen has said. You also might have seen the projection from the GOP that the new IRS funding will lead to more than 700,000 extra people getting audited that make less than $75,000 a year. That's a lot of audits. But as The Washington Post noted recently, it'd also be an increase of about 0.6 percent — keep in mind that about 125 million tax returns come from people making less than $75,000. (And as Brian noted, only about 0.1 percent of taxpayers making between $75,000 and $100,000 got audited as recently as 2019.) In any event, experts say there will be further clues to how the IRS and the Biden administration plan to use this new enforcement money, outside of this new spending plan from the IRS. The vast majority of audits that the IRS conducts are correspondence audits, which are conducted through the mail and generally deal with more straightforward issues. These are also the kind of audits that people with more modest incomes are likely to experience. But the IRS would need to hire more sophisticated auditors to handle complicated cases involving big corporations and the uber-rich. "That could be a real indicator of the seriousness of the administration's plan to target the higher income levels — who they're hiring," said Janet Holtzblatt of the Urban-Brookings Tax Policy Center.
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