During his confirmation hearing before the Senate Finance Committee on November 14, David Johnson, President Biden’s nominee for the Inspector General for Tax Administration (TIGTA), made strong commitments to address allegations of misconduct within the IRS. These allegations include politically motivated audits and unfair targeting practices, especially against small businesses. Johnson emphasized the need for accountability in the IRS, promising that under his leadership, TIGTA would act as a watchdog to ensure that taxpayers are treated fairly. His vow was underscored by bipartisan concerns from lawmakers about the potential misuse of IRS authority and the agency’s adherence to directives aimed at protecting vulnerable taxpayer groups, including low-income individuals.
Senator Ron Wyden (D-OR), chairman of the Finance Committee, directly questioned Johnson about how he would manage politically driven actions by the IRS if he is confirmed. Wyden’s inquiry focused on preventing audits based on an individual’s political affiliation, a serious concern for many lawmakers. Johnson responded assertively, stating that any attempt to politicize the IRS would constitute a severe abuse of power and that it would be TIGTA’s responsibility to prevent such actions. He emphasized the importance of integrity in the IRS and committed to thorough investigations of any reported misconduct, ensuring findings would be reported transparently to Congress and the public.
Senator Marsha Blackburn (R-TN) raised significant concerns regarding IRS audit practices impacting small businesses, particularly those earning under $400,000. She referred to a 2022 directive from Treasury Secretary Janet Yellen that aimed to limit increased audits for small businesses and low-income households, yet expressed doubt regarding the IRS’s compliance with this directive. Blackburn pointed out a recent TIGTA report indicating that the IRS was still finalizing critical definitions that could directly affect small businesses, such as what constitutes a “small business.” She sought Johnson’s commitment to further investigate these audit processes to ensure adherence to the 2022 directives.
The TIGTA report highlighted concerning delays within the IRS regarding its compliance with the directive to protect small businesses from increased audits. While the agency plans to define small businesses as those with assets under $10 million, it has yet to finalize this definition, raising alarms about potential non-compliance as the deadline approaches in fiscal year 2025. In a response to these concerns, IRS Deputy Commissioner Douglas O’Donnell reiterated the agency’s commitment to the directive. He stated that the IRS is focusing its audit efforts on higher-income earners and larger corporations, thus aligning with the Secretary’s directive to limit audits on small businesses and households earning below $400,000.
Despite these reassurances from IRS officials, Blackburn underscored that small business owners still feel vulnerable, fearing that additional funding for the IRS—part of the Biden administration’s plan to allocate $80 billion to the agency—could lead to increased scrutiny and enforcement actions. Johnson acknowledged these fears, reiterating that TIGTA would play a crucial role in ensuring the IRS fulfills its commitments effectively. He expressed the importance of follow-up on previous reports to monitor the IRS’s adherence to its promises and alleviate concerns among taxpayers.
As the confirmation process for Johnson moves forward, both Democratic and Republican lawmakers are keenly observing how his tenure at TIGTA will unfold, particularly in light of increasing scrutiny directed at the IRS. With anxiety over audit practices still prevalent among small business owners, Johnson’s pledges to protect taxpayers and ensure fair treatment are set to be put to the test. His ability to restore confidence in the IRS will be crucial in determining not just the agency’s future direction, but also in addressing the tangible concerns of everyday Americans who feel targeted by the tax system.