President Biden signed into law the Inflation Reduction Act on August 16, 2022, in part which gives the IRS almost $80 billion spread over the next 10 years on top of its regular annual funding. The money is meant to be used for:
- Enforcement and collection measures ($45.6 billion)
- Operations support ($25.3 billion)
- Modernizing business systems (including further development of callback technology on phone lines) ($4.8 billion)
- Taxpayer services ($3.2 billion)
What everyone is wanting to know: what will the IRS do with the enforcement money?
The Treasury Department and the IRS say the money will be used to audit the big guys: big corporations, pass-through entities, high net-worth individuals, overseas and crypto-currency transactions, etc. The IRS plans to hire a fair amount of people, which includes revenue agents, tax specialists, collectors and IT professionals. In hopes of this, it is estimated the IRS will raise revenue about $204 billion over the next 10 years.
Democrats, treasury officials and the IRS are promising that taxpayers earning under $400,000 (including businesses) will not see an increase in audit rates. Can this promise be kept? It is too early to tell but we can keep our fingers crossed.
Cited from: The Kiplinger Washington Editors. (2022, August 18). The Kiplinger Tax Letter. The Kiplinger Tax Letter, 97(17), 4. kiplinger.com