William Henck, a former Internal Revenue Service lawyer who was forced out after making allegations of internal malfeasance, said the government will target middle-income Americans with new audits under the Inflation Reduction Act.
Henck, who worked at the IRS for 30 years until departing in 2017, slammed the IRS and others who have argued additional funding would only result in increased audits for billionaires and corporations. The Inflation Reduction Act, which President Biden signed into law, would nearly double the IRS’ budget, appropriating an additional $79 billion to the agency over the next decade.
“The idea that they’re going to open things up and go after these big billionaires and large corporations is quite frankly bulls–t,” Henck told Acesparks Business in an interview. “It’s not going to happen. They’re going to give themselves bonuses and promotions and really nice conferences.”
“The big corporations and the billionaires are probably sitting back laughing right now,” he continued.
Henck added that he thought it was “insane” to double the agency’s budget. He said the IRS will target businesses who don’t have enough money to hire Washington lobbyists.
Americans with an annual income of less than $75,000 would be subject to nearly 711,000 new IRS audits under the legislation, according to a House GOP analysis that used historic audit rates. By comparison, individuals making more than $500,000 will receive about 95,000 additional audits as a result of the Inflation Reduction Act.
However, IRS Commissioner Charles Rettig pushed back on reports of new audits, saying “audit rates” would remain the same and that the bill was “absolutely not about increasing audit scrutiny on small businesses or middle-income Americans.” White House press secretary Karine Jean-Pierre told reporters last week that there would be no new audits for people making less than $400,000 per year.
“There will be considerable incentive to basically shake down taxpayers, and the advantage the IRS has is they have basically unlimited resources and no accountability, whereas a taxpayer has to weigh the cost of accountants, tax lawyers — fighting something in tax court,” Henck told Acesparks Business.
New hires at the IRS will also be assigned simpler cases, Henck said, meaning an added focus on small-business audits.
“If you own a roofing company, you better count on getting audited because that’s what they’re going to be doing,” he continued. “They’re going to be going after your car dealerships, roofing companies.”
Henck said during his time at the agency, he had observed IRS agents specifically targeting elderly taxpayers, some of whom were World War II veterans, because they could easily be forced into settlements.
“I protested both internally and externally, but I was ignored,” he told Acesparks Business. “In their last days on Earth, these taxpayers were being bullied by the same government they had fought for as young men and no one cared.”
“This is the agency that is going to double in size.”
In 2013, Henck told the Washington Post that the IRS team he was assigned to advise on legal matters was told by senior officials to “stand down” while investigating a paper company that took advantage of a biofuel tax credit. Henck, who believed the credit was taxable, said the company did not list the credit as taxable income in its returns, a matter his team identified as a potential issue.
Other paper companies quickly filed refund claims after the IRS backed down from its investigation into the company’s classification of the tax credits, Henck added. As a result, the federal government paid paper companies $8 billion in 2009 amid the financial crisis, the Washington Post reported at the time.
The IRS then opened an investigation into Henck for allegedly revealing sensitive information when he spoke with the media in 2013, leading to his termination in 2017.