From the Tax Law Offices of David W. Klasing - Former IRS Chiefs Suggest New Funding Will Lead to More Enforcement Against the Wealthy

IRVINE, Calif., Sept. 20, 2022 /PRNewswire/ -- Recent legislation passed by the Biden administration has garnered the support of many former federal officials, particularly those from the Treasury Department and the IRS. These former agency chiefs have publicly applauded the steps of the administration, particularly the bolstering of the IRS' budget.

The praise comes from the universal belief of all of these proponents that the IRS needs to be more active in auditing and investigating tax evasion. The general belief is that this new implementation will affect high-earning taxpayers and businesses specifically above others, but the full ramifications of a more aggressive IRS are not yet known.

To stay up to date on developments in federal tax law and enforcement so that you and your small business are always protected, schedule a reduced rate case evaluation with the Tax Law Offices of David W. Klasing today by calling our offices at (800) 681-1295.

In a statement released last month, three former commissioners of the IRS made it clear what they thought of the current state of their former agency's "status quo." The statement expressed disappointment that the agency had "shrunk to 1970s levels with technological infrastructure that is decades out-of-date and an audit rate that [had] dropped by 50 percent."

The three ex-feds– Fred Golberg, Charles Rossotti, and John Koskinen– came together to issue the statement in response to the Democratic administration's then-proposed $80 billion investment into the agency. The federal action, which has since been passed into law as part of the Inflation Reduction Act, is expected to help bolster the IRS in taxpayer assistance, auditing, and criminal prosecution.

"The sustained, multi-year funding contained in the reconciliation package is critical to help the agency rebuild," the former commissioners wrote in their joint statement. "That will mean vastly improved services for taxpayers, who will be able to interact with a modernized IRS in a digital way, whose questions will be answered and issues resolved promptly and fairly, and who will find it simpler to get access to the benefits and credits to which they are entitled."

Other parties that have voiced their support include five former Treasury Department secretaries: Robert Rubin, Larry Summers, Jacob Lew, Timothy Geitner, and Henry Paulson. The former secretaries said the bill was "financed by prudent tax policy that will collect more from top earners and large corporations." And they pushed back against the idea that the bill would raise taxes on middle-class households. "Taxes due or paid will not increase for any family making less than $400,000/year," they wrote. "And the extra taxes levied on corporations do not reflect increases in the corporate tax rate, but rather the reclaiming of revenue lost to tax avoidance and provisions benefiting the most affluent."

The IRS has plans that have been in the works for years with the added war chest they will receive as a result of the new legislation. This includes additional hires, more audits, addressing the reduction in workforce at the agency, increased technological sophistication, and getting back a larger portion of the annual unpaid tax debt.

Hiring More Staff

The 87,000 figure that has made headlines is an estimate provided by the Treasury Department last year and includes people who would be hired over the next decade to fill in for tens of thousands of expected retirees. Whatever the actual number, the hiring will be for all kinds of positions, including auditors, technical support staff, and customer service specialists.

Increase in Audits

The Biden administration says it will not audit households earning less than $400,000 per year. Still, a major goal of the extra funding is to increase the audit rate for high-income taxpayers and corporations. This could be tricky in some circumstances since sometimes it can be hard to know how much someone earns until they are audited. Further, the majority of audits each year target small businesses, which may be owned by individuals earning less than $400,000.

Address Retirement Boom

Thirty years ago, the IRS had 117,000 employees. Today, the agency's workforce stands at just over 79,000, despite the country's population growing by nearly a third over the last three decades. Much of the additional funding will go toward simply recovering capabilities that were lost over time due to funding cuts.

Updated Agency Technology

One of the reasons why the IRS has been unable to handle its expected workload in recent years is that its office software has lagged behind. With the new funding, the agency is expected to make serious inroads in developing its technological sophistication. One example is the Treasury Department's recent licensing of cryptocurrency tracing software from the private sector. Deals like these should be expected to continue into the future.

Go After Unpaid Taxes

Tax analysts widely agree that the $80 billion will help the IRS recover far more revenue. The Congressional Budget Office estimates that the IRS will bring in an additional $124 billion over 10 years, above and beyond the additional funding. Some experts say the figure could be substantially higher. This only happens, however, if the IRS uses its new resources to target unpaid tax revenue that they previously hadn't been able to recover. Therefore, a substantial portion of the new funding will go into litigation so that the government can secure fines and convictions against evaders.

You can take the first step in preventing IRS audits and criminal tax investigations into you or your business by scheduling a reduced rate case evaluation with the Tax Law Offices of David W. Klasing. Call our Dual Licensed Tax Attorneys and CPAs at (800) 681-1295 today to learn more.

If you are concerned about the possibility of an IRS audit or criminal tax investigation into you or your business and past filings, it is important to assess all possible options to avoid such a situation.

The federal government's voluntary disclosure programs provide an avenue for taxpayers who are aware of noncompliance in their filing history to come forward with additional information without being coerced into doing so through audit or criminal tax investigation. By using the voluntary disclosure option, many taxpayers avoid can avoid or reduce the penalties and fines that they might otherwise face if the government had to seek out the violations themselves.

However, voluntary disclosure may not be right in every situation. Firstly, if a criminal investigation is already underway, your decision to voluntary disclose will likely have no effect on the consequences and may even end up doing more harm than good. It is always important to discuss your situation with a seasoned Dual Licensed Criminal Tax Defense Lawyer and CPA, even if you made a genuine and honest mistake.

If you are dealing with serious tax matters, you deserve tax assistance that you can rely on. Schedule your first reduced-rate case evaluation with our Criminal Tax Defense Lawyers by calling (800) 681-1295 today or schedule online here.

If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.

Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply. 

It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.

Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.

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Public Contact: Dave Klasing Esq. M.S.-Tax CPA, [email protected]

SOURCE Tax Law Offices of David W. Klasing, PC