Get ready, ultra-wealthy Americans: President Joe Biden wants you to start paying your share.
Through the Cut Inflation Act, Biden plans to increase funding for the IRS to help the agency catch sneaky tax cheats — especially high earners who like to find loopholes in the law.
A May 2021 Treasury Department report estimates that the extra money would allow the agency to hire about 87,000 new employees — which could include revenue and customer service officers and IT staff — by 2031.
Proponents believe the increased funding could bring in as much as $1 trillion by forcing tax cheats to pay their dues, especially after years of budget cuts that have drained the system.
However, some critics fear the increased scrutiny of taxpayers will backfire.
Chances are you are paying too much for your home insurance. Here’s how to spend less for peace of mind
Here are 3 money moves to boost your bank account this weekend
Your Money Is Trash: Here Are 4 Easy Ways To Protect Your Money From Blank Inflation (Without Being A Stock Market Genius)
The IRS desperately needs support
The $80 billion in funding over the next 10 years will help the IRS modernize its infrastructure, strengthen law enforcement and replace its aging workforce (50,000 of the IRS’s 80,000 workers). IRS are expected to leave within the next five years).
The agency was reportedly underfunded by around 20% for a decade, leading it to cut both staff and technology updates.
Bogged down by a processing system more than half a century old and a backlog that includes millions of unprocessed paper documents, the IRS has needed more resources and support for some time.
Customer service is also understaffed. During the 2022 filing season, the IRS received about 73 million phone calls from taxpayers — but only 10% were answered.
Read more: Trade while the market is down: Here are the best investing apps to take advantage of once-in-a-generation opportunities (even if you’re a beginner)
“The combination of over 21 million unprocessed paper tax returns, over 14 million notices of mathematical errors, eight-month backlogs in processing taxpayer correspondence, and extraordinary difficulty to reach the IRS by phone has made this filing season especially difficult,” said Erin, the National Taxpayer Advocate. Mr. Collins wrote in his mid-year report to Congress.
Adding to these issues, former IRS commissioner Charles Rettig estimated in 2021 that the agency was losing $1 trillion in unpaid taxes each year, in part due to the evasion of the wealthy and large. companies. He also indicated that they could fall through the cracks in part due to the loosely regulated cryptocurrency market, foreign-source income, and abuse of pass-through provisions.
Rettig has long pushed for increased funding “to bring in the fire-breathing dragons” to take cheaters to task.
Could boosting enforcement do more harm than good?
Proponents say the funding will help close the “tax gap” by helping to catch more fraudsters.
Of the $80 billion total, $45.6 billion has been allocated for increased enforcement – which will be used to hire more enforcement officers, provide legal support and invest in “investigative technology”. to determine who should or should not be audited.
But not everyone is thrilled with the news.
“They’re not going to get that ‘magic money,'” Brian Reardon told Bloomberg. Reardon is the president of the S Corporation Association, which represents small private companies that pass taxes on to their shareholders.
“If you increase enforcement on people who otherwise play by the rules and pay what they owe, you create resentment and anger. You undermine people’s faith in the tax system.
However, the Biden administration argues that the increased enforcement will be geared towards the ultra-wealthy and big business, and is not aimed at small businesses or households earning less than $400,000 a year.
Treasury Department research indicates that the richest 1% of Americans could dodge up to $163 billion in taxes each year.
That being said, while Eli Akhavan, a partner at Steptoe & Johnson in New York, expects audits to increase, he told his wealthy clients they “have nothing to worry about but a few ailments. head”, provided they follow good advice. and have their “ducks in a row”.
“If there is nothing to find, there is nothing to find,” says Akhavan.
What to read next
Over 65% of Americans aren’t looking for a better car insurance deal — and it could be costing you $500 a month
Want to earn big returns without the choppy stock market? Try the art
A TikToker paid off $17,000 in credit card debt by stuffing cash – can this work for you?
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
#IRS #hires #raise #trillion #forcing #tax #cheats #pay #firebreathing #dragons #trick