Posted on 08/25/2022 8:03:12 PM PDT by SeekAndFind
President Biden recently signed the Inflation Reduction Act, a sweeping energy, tax, and healthcare law that is partly designed to reduce the deficit. The legislation includes $80 billion in increased IRS funding over ten years. The idea is that the funds could help improve tax compliance, which in turn, could bring in an estimated $203 billion in increased revenue. It’s too early to know what the impacts will be. But you may have heard some lawmakers say that because of the new law, an “army” of 87,000 new IRS agents will be coming to audit ordinary taxpayers.
As is often the case involving matters of tax policy, the reality is somewhere in the middle. That’s why it’s important to know a few things about the Inflation Reduction Act and IRS enforcement, including how the IRS funding increase and more IRS hiring might impact you.
Why do people mention 87,000 agents? The 87,000 number appears to come from a 2021 Treasury Department estimate of the level of hiring needed to maintain IRS efficiency and keep up with retirements and other staff declines. However, the actual number of new IRS agents that will be hired because of the Inflation Reduction Act remains to be seen.
It should also be noted that enforcement doesn’t only mean more IRS agents. The Congressional Research Service points out that more enforcement could include legal support (e.g., the Tax Court gets about $150 million under the new law), and investments in technologies that aid IRS investigations.
Increased staffing would also likely include a variety of positions and roles that need to be filled at the IRS—not just enforcement agents.
Since increased IRS enforcement will eventually lead to more audits, a common question is whether those audits will focus on low and middle-income earners. A Government Accountability Office report found that in the past, lower-income taxpayers have seen higher-than-average IRS audit rates. Other FY 2021 data show that IRS audit rates for people with less than $25,000 a year in income were five times higher than audit rates for high-income taxpayers. But so far, the Treasury Department has indicated that low or middle-income earners, and small businesses, won't be the focus of increased IRS enforcement activity under the Inflation Reduction Act.
Ultimately though, the IRS wants to close an estimated $600 billion “tax gap.” (The tax gap is the difference between what people owe in taxes and what they actually pay.) To do that, the agency plans to focus on high-earners, large corporations, and complex partnerships. That’s potentially good news if you’re a household making less than $400,000 a year or a small business. But, if you are wealthy, you could see some increased audit activity in the coming years. Although, it’s hard to know what higher audit rates will look like, partly because IRS audit rates have historically been low.
Additionally, you may remember that during the COVID-19 pandemic, millions of tax returns and refunds were caught in a massive IRS backlog. The $3.2 billion for taxpayer services in the Inflation Reduction Act could be used to improve customer service. That includes having more people to answer the more than two million phone calls that the IRS reportedly receives each day during tax season. The money could also help the IRS avoid ending the tax season with millions of unprocessed returns, as they did in 2022.
Talk of the IRS hiring armed agents could be referring to the IRS CID, a division that focuses on enforcement of criminal tax cases. IRS criminal investigation special agents are authorized to carry firearms in certain circumstances. That’s because those approximately 2,100 agents work on cases where arrests are sometimes warranted. However, the IRS does not arm its typical enforcement agents, despite what you may have heard recently.
As a result, while enforcement activity, taxpayer services, and operations at the IRS could get a boost in the coming years because of the Inflation Reduction Act, you shouldn’t have to worry about a literal army of new IRS agents coming for your tax dollars.
Instead, stay informed, and tune in to any announcements or audit requests from the IRS. And if you’re looking for more information about how the Inflation Reduction Act might impact your taxes, see The Inflation Reduction Act and Taxes: What You Should Know.
And for more information about what’s in the Inflation Reduction Act of 2022, see EV Tax Credits Are Changing: What’s Ahead, You'll Save More on Green Home Improvements Under the Inflation Reduction Act , and Inflation Reduction Act Will Boost Obamacare Tax Credit.
How much money does Al Sharpton owe in back taxes?
Most likely audits? Church donors.
Ware the new IRS Formtroopers!
If you believe this, I have a bridge to sell you ...
“Throughout last year, IRS has purchased 5,000,000 rounds of ammunition.
This is all so disturbing because the United States is a country of ballots, not bullets, to settle political conflicts and competition. And it must remain a country of ballots.
Bkmk
This is real simple. They want to hire the extra investigators to find taxes that aren’t being paid. Where aren’t taxes getting paid? People who deal in all cash or non-business transactions like Facebook and Etsy sellers, artists, waitresses living off tips, landscapers and teenagers working under the table. The big businesses and high earners are already filing their taxes and use accountants, even if they were the targets, they would soon move on.
They already have the ability to look at bank transactions without a warrant, deposits of $600 or more (and it’s illegal to deposit less to avoid the taxman, which is one of the most screwed up laws ever written), it’s just a matter of having enough people to run the queries and fill out paperwork.
600 billion is chicken feed. The Regime throws that much away in a week.
First they will go through registered voters and take it from there
Trump voters. Just watch, wish I was wrong.
Civil war is coming, again.
Church donors and Trump voters might look a lot alike.
They have to get more money to pay the student loans.
Wisconsin wanna be Senator Mandela Barnes owes lots in back taxes but since he is a progressive communist and uses the Squad in his ads, he’s exempt.
There going after Trump voters, hard!
HA! They’ll be lucky if they get 87 applications.
We make 2 donations a year, 1 to the church we quit attending for health reasons, or lockdowns, and 1 to St. Judes. You could fill out income taxes on a postcard, nothing but standard deductions. And those don’t count. Obama raised medical deductions so high 2 old geezers can’t meet it.
And they know every dime we make on both our SS and his Navy, and Teacher’s pensions. Which aren’t big, the wrong era to make big bucks. At 74/82 we owe no debt.
The IRS is an organization whose function is to audit taxpayers. With it hiring 87,000 new employees, I believe there will be pressure to justify their existence. The new IRS mantra may be Beria-like: "Show me the taxpayer and I'll show you the crime."
87,000 ...... NOT GOOD!!
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