Over the past few years, the IRS has experienced significant difficulties processing tax returns, managing taxpayer communication, providing customer service, and maintaining review and enforcement efforts. While pandemic restrictions help to exacerbate the situation, the truth is these issues were building prior to then due to limited staffing and inadequate budgeting. To resolve the significant backlog and provide desperately needed resources, the Inflation Reduction Act, allocated an additional $80B over a ten year period. The funds were separated into four categories including enforcement, operations support, system modernization, and taxpayer services. Enforcement received the largest amount with $45.6B or a 69% increase over prior years.
On September 8, 2023, the IRS issued a news release (IR-2023-166) detailing enforcement priorities over the coming year. Regulators will be shifting attention to high-income earners, partnerships, large corporations, and promoters taking advantage of tax laws. Specifically, the agency will target those groups that have experienced a sharp reduction in audit rates over the past decade. In addition, the IRS will also be relying on Artificial Intelligence (AI) to help detect tax cheating, compliance issues, and to improve case selection. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.
Beyond just increasing scrutiny on the high-net-worth, partnerships, and others, the agency will also continue to protect taxpayers from the seemingly endless number of persistent tax scams. Protecting those with modest incomes, the IRS will continue efforts to increase awareness about these issues.
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The news of increased enforcement activities in the coming months is an important warning that high net worth and high-income partnerships should seriously consider. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1104 or click here to contact us. We look forward to speaking with you soon.
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