Leveling The Playing Field for The Tax System

The Internal Revenue Service (IRS), following the Inflation Reduction Act, is undertaking a historic shift in its enforcement and compliance strategies. This transformation aims to bring more fairness to the U.S. tax system, primarily by intensifying scrutiny on high-income individuals, partnerships, large corporations, and entities engaged in tax evasion.

The IRS will harness improved technology, including Artificial Intelligence, to enhance its ability to detect tax noncompliance and complex tax avoidance schemes. This change responds to the significant decline in audit rates for wealthier taxpayers over the last decade due to historical underfunding.

Enhanced Focus on High-Income Compliance

The IRS is now prioritizing compliance work related to high-income and high-wealth individuals and partnerships. This includes a specific focus on taxpayers with total positive income exceeding $1 million who have considerable recognized tax debts. Building on earlier successes, where significant amounts were collected from high-income earners, the IRS is further expanding its efforts. Additionally, the agency is initiating targeted measures to ensure large corporations, especially U.S. subsidiaries of foreign companies and major corporate taxpayers with significant assets and taxable income, meet their tax obligations. This approach addresses issues like noncompliance and misuse of tax provisions, including transfer pricing strategies by large foreign-owned corporations.

Substantial Funding Increase and Modernization

The Inflation Reduction Act has substantially increased the IRS’s funding by $80 billion over the next ten years, with more than half of this funding designated for enforcement activities. This injection of funds is anticipated to generate significant additional revenue. The allocation includes various areas like examinations, collections, criminal investigations, legal and litigation support, operations support, and business systems modernization. The objective is to distribute the tax burden more equitably, ensuring that high-income individuals and large corporations contribute their fair share of taxes. The IRS’s commitment to using advanced technology aims to enhance compliance and customer service, respecting taxpayer rights, and narrowing the tax gap.

The strategic redirection of the IRS’s focus represents a crucial step toward a more equitable tax system. It underscores the need for high-income and wealthy individuals, as well as large corporations, to comply with their tax responsibilities fully. This effort, supported by sophisticated technology, signifies a significant change in the landscape of tax enforcement and compliance.

Getting the Assistance You Need When You Need it Most

At Weisberg Kainen Mark, we understand the evolving dynamics of tax laws and the implications they have for individuals and businesses. Those impacted by these changes may find it challenging to appropriately plan for potential tax resolution, and having knowledgeable guidance is essential. Schedule a consultation with our team by calling (305) 374-5544, to discuss how these IRS changes may impact your tax situation and to ensure that your tax affairs are in full compliance with the latest regulations. Take a proactive step towards understanding and adapting to the changing tax environment.

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Weisberg Kainen Mark, PL

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