What an Increased Tax Enforcement Push Could Mean for You

05 Aug What an Increased Tax Enforcement Push Could Mean for You

Recently, the IRS has begun hiring thousands of new tax auditors in preparation for a serious increase in tax enforcement. The push began back in June, with President Biden’s $579 billion infrastructure plan gaining headway in the Senate. Though the increased IRS enforcement was dropped from that particular bill in mid-July, it’s not completely off the table. Here’s what you need to know about the potential for increased tax enforcement and what it could mean for you.

If Not Now, When?

So, if Biden’s proposed $80-billion investment into the IRS is no longer part of the infrastructure bill, will it ever actually happen? While it’s difficult to predict exactly when it might happen, Biden and Democratic Senators haven’t given up on it entirely.

The proposal is now being wrapped into a larger reconciliation spending bill. Democrats hope to be able to pass the reconciliation bill without Republican support, under budget rules that would allow them to proceed with a simple majority. With the tie-breaking vote of Vice President Harris available to them, the odds of it going forward seem to be in their favor.

What Is the Increase For?

The $80 billion Biden wants to invest in the IRS would be dedicated to hiring personnel and improving audit technology. Specifically, the IRS is looking to add about 2,000 new employees to their small-business unit (including 1,300 revenue agents) before the end of their fiscal year in September. Additionally, they’re filling 500 positions in their criminal investigations division.

The bottom line is to expand the IRS’s ability to follow through on audits—especially among businesses and high-income earners. The organization has faced criticism in the last few years regarding audit rates among these demographics.

Will It Impact You?

For most of our clients, the real question about this push is how likely you are to be audited now. For the average W2 employee earning a moderate income, the tax audit increase isn’t going to make you any more likely to be audited. However, the likelihood of being audited increases significantly with this push if you fall into any of these three categories:

• You earn more than $100,000 in a year.
• You’re a shareholder in a limited partnership.
• You own a business.

If you fall into any of these categories, it’s important that you maintain meticulous records and are prepared should you be audited in the future.

How We Can Help

If you have any concerns about the push for more frequent audits, we invite you to reach out to our team. When you work with one of our CPAs, we can provide you with professional audit representation in Provo for both in-person and correspondence audits. We can also review your records and help you to correct inaccuracies and organize documents so that you’re prepared if you’re selected for an IRS audit. Contact us today to schedule a consultation with one of our tax professionals.

SOCIAL: The IRS has begun hiring thousands of new auditors for a tax enforcement push. What does this mean for you? Find out in this blog from The Accounting Guys.