LAST YEAR, IRS GOT A MAJOR FUNDING WINDFALL: $80 BILLION, TO BE SPREAD OUT OVER 10 YEARS
This is in addition to IRS’s regular annual funding. More than half of the money is for enforcement and collection measures. The rest is divided between operations support, taxpayer service and modernizing antiquated business systems.
IRS HAS NOW RELEASED ITS LONG-AWAITED PLAN ON WHAT IT WILL DO WITH THE MONEY
Not surprisingly, the 150-page blueprint has its critics and supporters. It’s high-level and somewhat broad. Details need to be enhanced, that’s for sure. But the vagueness of the plan appears to be intentional. The IRS commissioner describes the document as flexible and says that the Service would regularly provide Congress with progress updates.
THE PLAN HAS FIVE OBJECTIVES AND 42 INITIATIVES COVERING OVER 190 PROJECTS
Among the non-enforcement initiatives and projects in the document: Increase the features of IRS online accounts and expand them to business taxpayers. Widespread digital scanning of incoming paper returns. Replace outdated databases. Quicker legal guidance. Real-time updates on return processing, refunds and audits. Simplify the process for tax payments. Plus improved administration of penalties.
ALTHOUGH OVER 50% OF THE $80 BILLION IS TO BE USED FOR IRS ENFORCEMENT…
The enforcement details are the least fleshed-out. There’s not much more on this topic that we didn’t already know. IRS reiterates it will conduct more audits of large corporations and partnerships, high-wealth and high-income individuals, virtual currency transactions, cross-border activities, and in other key areas in which audit coverage has fallen. IRS will use more data analytics to select returns for review. And there’s the oft-repeated vow that taxpayers making $400,000 or less won’t see more audits when compared with historic audit rates. But there’s no detail on how IRS will keep this vow or what historic audit rates it will use for this purpose. Also, the plan doesn’t address concerns raised by some as to what the Service will do to rein in wealthy tax evaders who report less than $400,000 on their returns.
IRS IS GOING ON A MASSIVE HIRING SPREE
It wants to bring on data scientists, experienced accountants and lawyers, specialists and customer service personnel. A major criticism of the plan is that IRS includes its desired hiring levels for two years, but no further. It hopes to add nearly 30,000 additional workers through 2024. The agency will face key hiring hurdles. It will be hard for it to compete with private-sector accounting and law firms on compensation in a tight labor market.
IRS WILL BE UNDER THE MICROSCOPE…
Not only from Republican lawmakers, who have blasted the agency’s plan, but also from the U.S. Govt. Accountability Office, Treasury Inspector General for Tax Administration and the IRS’s taxpayer advocate. All will be sure to keep a close eye on the Service and how it spends the funds.