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IRS To Audit Wealthy Individuals and Large Corps & Partnerships With $45.6 Billion Provided by The Inflation Reduction Act

IRS To Audit Wealthy Individuals and Large Corps & Partnerships With $45.6 Billion Provided by The Inflation Reduction Act

The Internal Revenue Service unveiled on April 6, 2023, its Strategic Operating Plan, an ambitious effort to transform the tax agency and dramatically improve service to taxpayers and the nation during the next decade. The 150-page report to the Secretary of the Treasury outlines the agency’s historic plans to make fundamental changes following funding from last year’s Inflation Reduction Act. 

The plan makes clear that the resources to be deployed over the short and long term will be used to accomplish various objectives including:

  • Adding capacity to unpack the complex filings of high-income taxpayers, large corporations and complex partnerships and
  • Addressing a growing chasm between the number of experienced compliance personnel at the IRS who audit high-income, high-wealth tax filings for compliance (about 2,600 employees) and the roughly 30,000 individuals making more than $10 million a year, 60,000 large corporations and 300,000 large partnerships and S corps.

The spending plan calls for hiring and onboarding the first groups of compliance specialists to focus on large corporations and partnerships and high-income individuals in the 2023 fiscal year. Under the plan, the agency would start using new compliance tactics for the wealthy and large corporations in the 2025 fiscal year.

Werfel Said Households And Small Businesses Earning Less Than $400,000 Annually Should Have No Reason To Be Concerned About Increased Enforcement Under The Plan.

Treasury Secretary Janet Yellen has issued a directive forbidding the IRS from boosting audit rates for those populations relative to historical levels. 

The plan is organized around five objectives which includes expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap. The plan also highlights how the IRS will be working to ensure fair enforcement of the nation’s tax laws and compliance with existing laws while respecting taxpayer rights. 

“Effective enforcement is an important component of this plan,” Werfel said. “Revenue collected by the IRS supports everything from the nation’s defense to education and roads.”

The IRS Will Be Solely Focused on Increased Efforts on Identified Compliance Issues Involving Large Corporations, Larger Partnerships And High-Wealth Individuals.

However, practically increasing enforcement work may take years, based upon the time needed to hire and train a large number of personnel.

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Read more at: Tax Times blog

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