Republican Senators have uncovered an alarming truth about Biden administration overreach.
Main Street businesses have been caught in the crosshairs of an IRS initiative designed to increase audits.
And four Senate Republicans just exposed Biden’s IRS for going after small business owners through a secretive program many Americans never heard about.
Republican Senators demand answers about IRS targeting of small businesses
Republican Senators Marsha Blackburn (R-Tenn.), John Barrasso (R-Wyo.), Steve Daines (R-Mont.), and James Lankford (R-Okla.) have sent a stern message to the Treasury Department about an IRS program created during the Biden era.
In their May 14 letter, the Senators demanded answers about the controversial “pass-through compliance unit” that was quietly established within the IRS’ Large Business and International (LB&I) division.
“The creation of this unit appears motivated by ideology rather than principles of sound tax administration,” the Senators wrote to Treasury Secretary Janet Yellen.
According to the Senators, this specialized unit appears designed to target family businesses, professional services firms, and real estate ventures – the backbone of local economies nationwide.
“Pass-through entities form the bulk of Main Street businesses across the country,” the Senators wrote. “This includes countless family businesses, professional services firms, and real estate ventures that serve as the backbone of our local economies.”
The Senators pointed out that taxpayers have the “lawful right” to choose these business structures, which provide benefits like liability protection and operational flexibility.
Creation of an enforcement unit specifically targeting them raises serious questions about what the Biden administration’s motivations could have been.
Small businesses left defenseless against complex IRS audits
What makes this program particularly troubling is how it subjects small business owners to the same complex examination procedures designed for major corporations with sophisticated tax departments.
In October 2024, the IRS announced that “LB&I will be responsible for starting pass-through exams, regardless of entity size” and bragged about “removing the entity-size barrier” as a way to increase audit rates.
This bureaucratic maneuver essentially moved small businesses traditionally handled by the Small Business/Self-Employed division into the crosshairs of the Large Business and International division – a unit equipped with far more intrusive audit capabilities.
“Most American small businesses lack the resources to navigate these intensive audits,” the Senators noted, creating “disproportionate compliance burdens despite prior assurances that taxpayers under $400,000 would not face increased enforcement relative to historical levels.”
This broken promise from the Biden administration left small business owners vulnerable to expensive, time-consuming audits they aren’t equipped to handle.
A politically-motivated audit program?
The Republican Senators didn’t mince words about what they see as the true motivation behind this initiative.
The IRS announcement explicitly stated that these changes were designed primarily to “achieve its goal of increased audit rates in this complex area” rather than address legitimate compliance concerns based on evidence.
“This focus on increasing audits rather than improving compliance suggests an agenda-driven approach to enforcement,” the Senators wrote.
The IRS also referenced targeting “complex arrangements” without ever clearly defining what makes an arrangement “complex” – leaving the door open for auditors to target legitimate business structures based on political ideology rather than actual tax compliance issues.
In their letter, the Senators pointed out: “IRS Publication 3905 references the LB&I’s ‘focus on high-income individuals’ as a source of pass-through compliance risk, suggesting targeting of business owners based on their income rather than any evidence of likely non-compliance.”
This approach appears to continue the pattern seen throughout the Biden administration of using federal agencies to target political opponents and middle-class Americans while ignoring genuine problems.
Senators demand transparency on secretive program
The Senators’ letter included seven pointed questions for Secretary Yellen, demanding complete transparency on everything from how the unit was formed to the criteria used for selecting which businesses to audit.
They also demanded to know what specific compliance concerns justified creating a specialized unit targeting pass-through businesses, and why the Treasury Department believed it was appropriate to subject small businesses to complex examination procedures designed for large corporations.
The Senators didn’t hold back in their criticism of the program’s seemingly arbitrary focus: “Vague references to ‘certain characteristics’ without transparent risk criteria may lead to inconsistent enforcement or selection bias,” they wrote.
They also raised concerns about the program’s lack of “any formal feedback from stakeholders or businesses potentially impacted by these changes,” suggesting the Biden administration purposely kept business owners in the dark about this new enforcement initiative.
More IRS enforcement coming without action
The Senators’ letter comes at a critical time as the Treasury Department evaluates which Biden-era policies to continue and which to terminate.
Without intervention, this aggressive audit program targeting Main Street businesses could continue harming family-owned enterprises that already face enough challenges with inflation, labor shortages, and supply chain issues.
Small business owners make up the backbone of communities across America, providing jobs and essential services in areas often overlooked by major corporations. Subjecting these job creators to complex audits designed for multinational corporations represents another example of government bureaucracy run amok.
The Senators set a June 14, 2025 deadline for the Treasury Department to respond to their questions and provide a full explanation of the program’s purpose, metrics for evaluation, and justification for subjecting small businesses to complex audit procedures designed for sophisticated taxpayers.
As this story develops, business owners across America will be watching closely to see if the Treasury Department addresses these legitimate concerns or allows this harmful program to continue unabated.
