Wealthy Americans who choose to cheat on their taxes are facing the biggest threat from the IRS that they have seen in years. In recent weeks, we have seen increased efforts by certain members of Congress to put a stop to this new IRS regime. However, this battle between the IRS and those practicing tax evasion does not seem like it will go away any time soon.
Advocation for IRS Funding
When President Biden passed the Inflation Reduction Act, $80 billion was earmarked for the Internal Revenue Service over the next 10 years. While this funding to the IRS has both supporters and people who are against it, advocates for the funding are presenting an interesting argument.
People who support the IRS receiving $80 billion over the next decade argue that this new money could help in cracking down on people trying to cheat the tax system. Advocates also say that the reinvigoration of the IRS would raise approximately $1 trillion. The main way this money would be raised is by cracking down on tax cheats and making these people pay their fair share.
Against IRS Funding
Members of Congress that oppose the amount of money the IRS is receiving also have a fair argument in this battle. Many opposers raised questions and doubts when it comes to the bold prediction that the IRS could raise $1 trillion, just by cracking down on tax evasion and other tax cheats. Furthermore, certain members of Congress do not find it necessary that the IRS is hiring and paying almost 100,000 new agents to be digging into the finances of everyday American citizens.
Out With the Old in With the New
Former IRS Commissioner Charles Rettig’s term ended shortly after the midterm elections. Doug O’Donnell is the new acting commissioner, and there have also been reports that President Biden’s nominee for the position, Danny Werfel will eventually take over the position. If Danny Werfel becomes the new commissioner of the IRS, it is expected that agency will receive even more funding in the coming years.
Putting This Money to Use
Ron Wyden, who is an Oregon Democrat and also chairs the Senate Finance Committee, said this in a statement last week. “Overseeing the implementation of these investments will be a big focus in the next Congress.”
Wyden and his allies in Congress have long been seeking funding and new employees for the IRS. They argue that employment is needed to keep pace with the complex tax strategies that the wealthy are using to pay fewer taxes.
Out of the $80 billion in funding that the IRS has received, roughly $46 billion of it is going to be devoted to increased enforcement against tax cheats and tax evasion, according to the Biden Administration.
Sources say that a lot of the increased enforcement money will be invested in technology. This includes the hiring of data scientists that will launch artificial intelligence that can determine whether or not a taxpayer is worthy of an audit.
Wrap Up
The President and his allies have insisted that this increased enforcement will only target the ultra-wealthy, but this new IRS approach has some American People concerned. As the IRS is becoming stricter than we have ever seen before, delivering accurate tax information on all returns is of vital importance.
Keeping an organized record of all your tax items, and keeping an open line of communication with your accountant and advisor will help you avoid becoming targeted by the new IRS regime.