If you haven't been paying attention, the Internal Revenue Service is going to hire 87,000 auditors. This means that if you haven't been reporting your taxes for cryptocurrencies or if you own a small business, you should get ready for things to get more tough. Let's get into the specifics of what this new bill would do.
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If you haven't been paying attention, the IRS will be hiring 87,000 auditors, so if you haven't been filing your taxes for cryptocurrencies or you run a small business, brace yourself—things are about to get difficult. Let’s get into what this new bill entails.
The Inflation Reduction Act of 2022—new multi-billion-dollar energy, healthcare, and tax legislation—provides $80 billion to the IRS and has some people worrying about new IRS agents and audits.Let’s dive into what this means for you!
The Treasury report's page 16 contains a chart that illustrates how adding almost $80 billion in resources over ten years would enable the hiring of 86,852 full-time employees over the following ten years. According to the report, the additional employees will carry out audits, upgrade information technology, and improve customer service.
The law that President Biden approved allocates over $80 billion. Janet Yellen,Treasury Secretary, is requesting a six-month timeframe for the agency's almost $80 billion in financing in light of President Joe Biden's comprehensive tax, health, and environment package recently being signed into law. In a memo to IRS Commissioner Charles Rettig, Yellen stated: "The Inflation Reduction Act delivers the IRS what it has needed for years—a predictable stream of mandated financing that will allow the agency to serve American taxpayers as they deserve.
According to the document acquired by CNBC, Yellen stated that the additional funding will assist the IRS in enforcing tax regulations for "high net-worth individuals, large firms, and complex partnerships who presently pay considerably less than they owe."
The Inflation Reduction Act allocates $80 billion to the IRS, $45.6 billion of which is earmarked for enforcement. Additionally, there will be more IRS agents in the upcoming years because the new law mandates increased IRS staffing. Although it will take time to train these additional agents to perform compliance audits, there will eventually probably be an increase in audit activity.
The Treasury Department estimated in 2021 that 87,000 new hires would be required to sustain IRS productivity and keep up with retirements and other workforce decreases. However, it is unclear how many new IRS agents will really be hired as a result of the Inflation Reduction Act.
It should be highlighted that enforcement encompasses more than just adding IRS agents. The Congressional Research Service notes that additional enforcement measures might include expenditures in technologies that help IRS investigations as well as legal support (the Tax Court, for instance, receives around $150 million under the new law).
Well, for starters, it doesn't exactly define what or who a “tax cheat” is. The tax code is incredibly complex, especially in light of how quickly things change and advance, particularly in fields like cryptocurrency or commerce due to globalization. Additionally, not all tax codes are always kept up.
There is a great deal of complexity and transparency. Therefore, even if you are not trying to trick the tax system and are only trying to comply, you might not know well essentially what you don't know. Even if it's ridiculous, the IRS still has you on their radar for an audit, and you could still end up in trouble whether you realize it or not.
If you're looking for a tax professional, we'd be happy to meet with you to discuss any questions or concerns you may have! Our expert team at Vincere Tax can help you through the tax season and help those auditors stay at a distance.
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