IRS to Boost Audits of 2021 Tax Returns with ‘Extra Staff’
The IRS Plans to Ramp Up Audits of American Taxpayers to Boost Federal Revenue
The Internal Revenue Service (IRS) is set to intensify its scrutiny of American citizens who contribute to its funding, aiming to generate more cash for the federal government.
The federal government announced Thursday that it would be increasing “[a]udits and other enforcement” to collect the $688 billion it claims taxpayers still owe from 2021 but have not yet paid, The Wall Street Journal reported.
This staggering amount represents the largest tax gap in history and is largely attributed to the economic growth during the administration of former President Donald Trump.
Approximately 80 percent of the shortfall, which amounts to $542 billion, is attributed to under-reported income as claimed by the government.
The remaining balance is owed by taxpayers who either did not file a 2021 return or filed but still have unpaid taxes for the year.
The IRS stated that part of the problem stems from the rise of the “gig economy” in the U.S., where fewer workers have taxes withheld from their paychecks, resulting in higher noncompliance with tax laws.
However, the agency assured the Journal that this situation is about to change.
“The additional staff and hiring at senior levels is really a critical aspect of being able to expand our coverage,” Melanie Krause, IRS chief data and analytics officer, told the Journal.
Krause was referring to the funding allocated by the so-called Inflation Reduction Act to enhance both customer service and enforcement by the IRS. However, some of these funds were later reduced by subsequent bills.
“This increase in the tax gap underscores the importance of increased IRS compliance efforts on key areas,” IRS Commissioner Danny Werfel said in a statement cited by the Journal.
The Journal reported that approximately $182 billion, which should have been reported as business or farm income on 2021 tax returns, was never disclosed. Nevertheless, the overall compliance rate of taxpayers is expected to remain at historical levels, around 86.3 percent.
However, these figures are estimates.
“When it comes to noncompliance, there’s a lot that’s difficult to measure,” said Natasha Sarin, a Yale law professor and former Treasury official quoted by the Journal.
It is anticipated that more “gig workers” will report their income more accurately in 2023 as payment apps begin to adhere to new IRS rules implemented this year.
“If people know the IRS has that information, they’re not going to underreport,” Sarin explained.
The IRS estimates that by improving compliance, it could reduce the tax gap between what Americans owe in 2021 taxes and what they actually pay to approximately $625 billion.
“If we do a better job of collecting revenue, we can make a down payment on fiscal sustainability and prioritize our spending,” Sarin said.
However, the IRS acknowledged that its estimates of taxes owed are likely underestimated, as Americans consistently find ways to evade federal taxes that are difficult to quantify, such as cryptocurrency and offshore bank accounts.
The post IRS Announces it Will Increase Audits of 2021 Tax Returns Thanks to ‘Additional Staff’ appeared first on The Western Journal.
How does the IRS plan on addressing the tax gap and improving tax compliance among American taxpayers?
Y The Wall Street Journal.
With the goal of closing this tax gap, the IRS plans to ramp up audits and enforcement measures to ensure taxpayers are fulfilling their obligations. The agency will be hiring additional staff at senior levels to expand coverage and improve its ability to detect and address noncompliance. The funding allocated by the Inflation Reduction Act, although reduced by subsequent bills, will help enhance customer service and enforcement efforts.
It is evident that the rise of the gig economy has contributed to the tax gap. With an increasing number of workers in this sector, taxes are not automatically withheld from their paychecks, leading to higher noncompliance with tax laws. This trend has been exacerbated by the economic growth during the Trump administration.
The IRS is determined to address this issue and collect the outstanding $688 billion in unpaid taxes from 2021. Around 80 percent of this amount, or $542 billion, is attributed to under-reported income. The remaining balance is owed by taxpayers who either did not file a return or filed but still have unpaid taxes for the year.
By intensifying audits and enforcement, the IRS hopes to reduce the tax gap and generate additional revenue for the federal government. This move reflects the agency’s commitment to ensuring tax compliance and fairness among American taxpayers.
As the IRS implements these measures, it is crucial for taxpayers to be aware of their rights and responsibilities. It is recommended to maintain accurate records, report all income, and seek professional advice if needed. Adhering to tax laws not only helps individuals fulfill their civic duty but also contributes to the overall well-being of the nation by supporting government programs and services.
In conclusion, the IRS plans to intensify audits and enforcement measures to address the significant tax gap in the United States. With the rise of the gig economy and under-reported income, it is crucial for the agency to ensure tax compliance among American taxpayers. By doing so, the IRS aims to boost federal revenue and strengthen the country’s financial stability. It is essential for taxpayers to understand their obligations and fulfill them diligently to maintain a fair and efficient tax system.
" Conservative News Daily does not always share or support the views and opinions expressed here; they are just those of the writer."
*As an Amazon Associate I earn from qualifying purchases
Now loading...