After the Congressional Budget Office announced that 78-90% of new audit revenue under the Cut Inflation Act would come from families earning less than $200,000 a year, independents and Small businesses are expressing concern that they will be the primary target of the IRS.
“I think this is the easiest way for the Biden administration to penalize those who work independently because they have tried and exhausted the means of Congress,” said Gabriella Hoffman, freelancer and Senior Fellow at the ‘Independent Women’s Forum, at Fox News Digital.
“It’s going to hurt the littlest of us,” she continued, “those who just want to get by economically or maybe trying to find alternatives with COVID, with the Great Recession and what now called the ‘Great Redesign’.”
Former investment banker and author of ‘The War on Small Business’ Carol Roth also told Fox News Digital that the IRS’ targeting of small businesses began last year with the US bailout. .
“I can tell you that it’s not the richest people, the billionaires, who trigger a global set of Venmo transactions of $600 in a year or who sell $600 on eBay,” Roth said. “It’s squarely middle class and probably to some degree lower class.”
On average, those who identify as self-employed earn less than $70,000 a year, according to recent data from ZipRecruiter. Fox Business confirmed last week that the bipartisan CBO informed lawmakers that audits of taxpayers earning less than $400,000 accounted for approximately $20 billion in revenue as part of the Cut Inflation Act, which was signed into law by President Biden on Tuesday.
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Hoffman said the recent $80 billion in funding from the IRS and the boost of 87,000 additional officers “will affect many people” working for themselves or for small businesses.
“A lot of the burden will fall on the self-employed, the independent contractors, the freelancers, everyone who makes up the gig economy, because they see them as this kind of untapped workforce, a kind of workforce. ‘wild work that must be mastered,’ Hoffman explained. “They think we don’t pay enough taxes, even though we pay more than our share.”
Roth raised a “red flag” that IRS agents may also specifically target e-commerce businesses.
“Anyone selling online who has been left alone, whether or not you have a business, but especially if it’s a side business, I think people are going to be shocked to hear that they’re flagged and that they ‘probably won’t have the right records in place,’ Roth warned.
With freelancers paying a 15% self-employment tax on top of state and federal taxes, Hoffman believes the IRS enhancement is being used as a tactic to “scare” Americans away from self-employment.
“They can’t try to regulate us. Maybe they’ll make it harder for us to work in such a setting that some people might say, ‘Damn. I will become a W-2 employee again. I can’t give up that much tax,” Hoffman noted. “For [the IRS]it’s about generating more revenue.”
According to Roth, applying the Inflation Reduction Act to IRS agents is intended to keep Americans dependent on the government.
“I think it’s the pursuit of trying to make people more dependent on government, because the reality is that taxation is meant to influence behavior,” Roth said. “So taxing productive businesses more means you want those businesses to do less, to do less well.”
Citing possible instances where the IRS might make an honest discrepancy or error, the two policy experts argued that freelancers or small businesses don’t have the time or money to dispute claims.
“It may be easier to pay the penalty and make it go away than having to spend more time and effort trying to fight it off,” Roth said. “To a small business owner, that time is money. A lot of them wear many hats and that just robs their business of productive time.”
“I think we need to be on high alert,” Hoffman warned, “and hopefully that doesn’t mean we have to seek preventive legal counsel. I never want to have to think about hiring a lawyer.”
Both experts expressed additional concerns that the Biden administration is arming the IRS to punish entrepreneurs and wealth creators.
“It’s just this vicious circle of, ‘What can we keep doing to cripple this part of the economy that’s not centralized, that’s not giving us lobby dollars, that’s not benefiting us?’ We see it in every action and it’s deliberate,” Roth said.
“As we all know very well, people who start businesses, even corporations and small businesses, make money and that trickles down to those they hire,” Hoffman said. “I think the Democratic Party, they don’t really listen to the concerns of voters in these times of high inflation…You don’t tax and you don’t spend when people are hurting economically.”
The power behind tax policy, Roth pointed out, is that it can be changed or repealed, but it’s up to voters to act early and show their support for politicians who support the self-employed and small businesses.
“When the next group of people who have some level of common sense come in, they have to come in, and the very first thing they have to do is repeal that,” Roth suggested. “And from there, they really need to focus on simplifying the tax code. The fact that we all have to do this crazy dance is insane.”
“I think that’s what voters are looking for: to put the brakes on this administration to stop them from attacking the self-employed, as well as these third-party vendors as well,” Hoffman added. “A lot of people see that the interests of small business are not represented under this administration.”
Representatives Elise Stefanik, RN.Y., Henry Cuellar, D-Texas, and Michelle Steel, R-Calif., had in July proposed a bill protecting the expansion of flexible and independent work, which was not presented to the House.
Jared Bernstein, a member of the White House Council of Economic Advisers, previously explained on “America’s Newsroom” how IRS funding and staffing is intended to catch cases of tax evasionnot tax “avoidance”.
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“I think what has become confusing in some of these discussions is that ultimately reversing long-term defunding – which is, in my view, a fictitious tax cut for wealthy tax evaders – is not going to increase one iota of audits,” Bernstein said. .
“What the Inflation Reduction Act does is it forces you to pay your taxes for the wealthiest taxpayers,” Bernstein told co-hosts Bill Hemmer and Dana Perino. “And I don’t think anyone, including you two, would argue with that claim.”
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FOX Business’ Hillary Vaughn contributed to this report.