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IRS Begins to Implement Inflation Reduction Act

As the Inflation Reduction Act has been passed into law for quite some time now, the IRS is finally beginning to implement it. The implementation process started with the revision of several dozens of tax forms, as well as enforcing new regulations. Besides that, there is still a lot more work to be done for the IRS to smoothly meet the requirements of the Inflation Reduction Act.

Revision Time

Last week, the Treasury Inspector General for Tax Administration released a report highlighting all the provisions the IRS must undergo, and what sort of impact that may have on this year’s filing season. The report states that the IRS estimates they will have to revise roughly 25 tax forms, 3 publications, and 29 tax instruction forms all before this year’s filing season begins. To accommodate the edited and new tax forms, the IRS must also modify about 20 of its information technology systems.

Provisions Affecting IRS

According to the Treasury Inspector General Report, The Inflation Reduction Act includes almost 40 provisions that directly relate to the Internal Revenue Service. One of these new provisions is the clean energy tax credits. These clean energy tax credits are given out by the IRS and have a direct effect on people who pay corporate taxes as well as small business owners.

TIGTA Monitoring

The Treasury Inspector General for Tax Administration(TIGTA) is keeping a close eye on the IRS. The goal is to monitor and track the progression of implantation efforts made by the IRS regarding the Inflation Reduction Act. On top of this, TIGTA will also asses the IRS’ development strategies when it comes to implementing tax-related processes.

“This Plan is key to ensuring that the public and Congress can hold the IRS accountable as it pursues needed improvements,” said the TIGTA report. “To that end, the Plan must include metrics for areas of focus and targets over the coming years that the agency will strive to achieve.”

Improvements Demanded

While TIGTA has its eye on the tax agency to ensure these changes are implemented, someone else is also keeping a tight leash on the IRS. Janet Yellen is in the report, and she highlighted a set of expectations for the IRS to follow this tax season for taxpayers to see notice the changes induced by the Inflation Reduction Act. These expectations include:

  • Staffing each of the IRS’s 361 Taxpayer Assistance Centers;
  • Improving the level of telephone service from approximately 15% to 85% and reducing average wait time from nearly 30 minutes to 15 minutes;
  • Automating the scanning of millions of individual paper tax returns;
  • Providing taxpayers the ability to receive and respond to notices online.

Wrap Up

The same TIGTA report indicates that the IRS is taking action to meet these expectations that have been laid out for the agency. As part of the Inflation Reduction Act includes $80 billion in funding to the IRS over the next decade, all people in congress want to ensure that this money is used by the agency in the most effective ways possible

 
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