Recently there was a bill proposed for hiring roughly 87,000 new IRS agents over the next 10 years. As of Aug 12, 2022, the proposed bill passed under a massive climate and health care bill to include the $80 billion increase in IRS funding over the next decade (a 10% budget increase annually) and an increase in agents. Prior years have shown that the number of agents has decreased by 30% since 2010.
We won’t see the estimated 87,000 new employees hired immediately, but rather at a rate of 15% annually. To put in perspective the number of agents that could be hired annually, in 2020 the IRS only achieved 37%, or roughly 5,000 agents, of their intended hiring goal. Regardless of the numbers that are actually reported being hired & retained, it is still happening and we will be seeing an uptick in the government agency’s procedures carried out.
The added enforcement assistance would mean that more taxpayers can potentially face an audit. The taxpayer classes that can expect the increased audits are millionaires, tax credit recipients, and those who make over $400,000 annually according to Natasha Sarin, a counselor for tax policy and implementation at the Treasury Department.
If you find yourself or your client the subject of an audit, keep in mind that careless errors in reporting income are punishable with a 20% penalty, and willful tax fraud comes with a 75% penalty and the possibility of jail time.
With this in mind, it is advisable to double and triple-check your tax documents, information, and your reported information by financial institutions to the IRS to stay compliant with the standards set by them.
Another way to stay ahead of possible issues is to join My Tax Courses Online on September 29th, 2022, at 2 pm, as we present the live webinar, Tax Implications of the Inflation Reduction Act, with Doug Stives.
