From the Tax Law Offices of David W. Klasing - Does Biden's 2021 $1.2T Budget Mean That the IRS Is Going to Increase Audits and Enforcement?

IRVINE, Calif., Feb. 3, 2022 /PRNewswire/ -- While it is true that the build back better plan did not pass, it is undeniable that for a while now, the Biden Administration has been talking about increasing the IRS budget and hiring additional staff. This would dramatically allow them to increase the number of audits and increase criminal tax enforcement of the Tax Code. Now that Biden's $1.2T infrastructure bill has been passed and the $1.75T Build Back Better (BBB) bill is still in the wings, it appears that increased enforcement is going to happen sooner rather than later.

If you are a taxpayer with high-value assets, deal extensively in cash, engage in complex aggressive business arrangements, employ tax shelters, utilize overseas accounts, and have offshore sources of income, or have extensive cryptocurrency holdings, you could be targeted by these increased audits and criminal tax enforcement measures. It is important to work with a dually licensed Tax Lawyer & CPA who can protect your interests, net worth, and your very liberty if necessary.

Call Tax Law Offices of David W. Klasing for a consultation with our dual licensed Tax Law Attorneys and CPAs today. Our phone number is (800) 681-1295.

Biden's Increased Enforcement Efforts at the IRS

For years, politicians allied with the Biden administration have discussed increased enforcement at the IRS. The problem up until now was budget and staffing. With Biden's new policies and funding in place, the IRS is in a strong position to increase its staff and put more personnel behind issues Democrats have been seeking to change for years. That means trying to get more money from taxpayers by investigating aggressive tax loopholes through tax audits and criminal tax investigations and going after more taxpayers for potential violations that they simply could not go after before.

In general, this will mean more strict enforcement of the Tax Code. If you have been working with a Tax Attorney or a CPA that you suspect might have been cutting corners or counseling you to take civil or criminal risks with your tax positions, it is important to have someone review your finances and taxes and level of exposure. There are many routes you can take, such as voluntary disclosure, that could help you get ahead of the stricter enforcement if you have a history of cheating and want to avoid criminal tax 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.

As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth.   See our Testimonials to see what our clients have to say about us!

It is also important to make sure that, starting with your 2021 taxes, you follow the rules by the book. Anything that can trigger an audit needs to be done right in 2021, or else you could potentially find yourself at the top of the IRS' new audit or criminal investigation list. This means especially dealing with reporting requirements for foreign accounts, ownership in foreign entities, trust and properly reporting offshore taxable income  – which could potentially include foreign accounts holding cryptocurrency.

How Did the 2021 Democrat Infrastructure and Build Back Better Acts Attempt to Affect Taxes?

The infrastructure bill and the BBB Act attempted to make wholesale tax changes to increase federal tax revenue – potentially cycling even more money through the IRS to fund additional enforcement down the road.  This primarily comes in three forms: a new minimum corporate tax rate of 15%, a 1% surcharge on stock buyback transactions, and SALT tax cap changes. You can bet that the democrats will be attempting to pass the BBB plan in 2022!

Will the Biden Administration Increase IRS Enforcement?

As of right now, it is impossible to tell whether the IRS will increase its enforcement actions if it gets more funding. However, it seems very likely that they will. Part of the goal of this budget increase is to add $80 billion to the IRS's budget over the next 10 years, allowing them to hire more workers and tax experts to plug the holes in their previous enforcement strategies.

The Treasury Department estimates that around $600 billion dollars go uncollected in taxes each year because of lacking civil and criminal tax enforcement – and that the top 1% of taxpayers are responsible for a quarter of that illegally dodged tax revenue. Those numbers are for illegally unpaid tax and seemingly do not even include estimates for uncollected penalties & interest.

Increased enforcement efforts were estimated by the Office of Budget Management to total around $200 billion over the next decade, which could be recycled into additional enforcement funding and policy spending for the Biden Administration as well.

Increasing tax revenue by going after high-asset taxpayers, investors, and corporations has been a stated goal of the Biden Administration and its allies in Congress for a while now, so it would not be surprising for these efforts to increase.

With increased audits and enforcement on the horizon, it is important to work with a tax professional you can trust and to get out ahead of any potential tax issues you face while there is still time to fix any past mistakes. Consider working with one of our dual licensed Tax Attorney & CPAs today rather than risking your financial future, tax penalties, or even potential jail time for past or current tax mistakes / criminal tax acts. The increased enforcement may mean that your 2021 taxes need to be pristine, but also that the IRS could take a deeper look at past tax years to try to find things to audit, criminally investigate or automatically adjust you for via a CP2000 notice.

Call Our Tax Lawyers and CPAs Today for Help

If you will potentially be affected by increased IRS audits and criminal tax enforcement, call (800) 681-1295 for a legal consultation with the dually licensed Tax Lawyers and CPAs at Tax Law Offices of David W. Klasing.

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.

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

SOURCE Tax Law Offices of David W. Klasing, PC