(TargetLiberty.org) – On Thursday, the IRS announced its plans to take “swift and aggressive action” on companies and individuals incorrectly paying taxes.
Thanks to the Inflation Reduction Act (IRA) and the cash injection it gave the IRS, the agency now has the funds to take a closer look at tax returns and reporting.
In its statement, the agency acknowledged that before the IRA a decades-long effort to reduce its budget had hindered its ability to keep abreast with “the increasingly complicated set of tools” tax evaders used.
Between 2010 and 2019, the agency’s audit rate for millionaires fell by more than 70 percent, while it dropped by more than 50 percent for large corporations. As a result, the IRS estimates there’s a $683 billion tax shortfall made up of taxpayers who underpay, underreport, or don’t file returns.
With audits set to increase, the IRS said it would focus its efforts on specific groups, with a concentration of those efforts going to:
- Individuals generating income of $10 million or more
- Corporations and high-income taxpayers who use business aircraft, like private jets, for personal purposes
- Companies with assets in excess of $250 million
- Complex partnerships with assets exceeding $10 million
Although audits on high-networth individuals and corporations will increase, IRS Commissioner Daniel Werfel revealed individuals making less than $400,000 and small businesses wouldn’t be subject to more audits under the agency’s more aggressive auditing.
When can taxpayers expect these changes to go into effect? According to the IRS, it plans to refocus its auditing efforts by tax year 2026.
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