The Internal Revenue Service (IRS) recently announced its ten-year Strategic Operating Plan to revitalize the agency, support its mandate, and create a taxpayer-first culture.
We have discussed the impacts of the chronic underfunding of the IRS. While underfunding has reduced the prosecutorial impact of the IRS, it remained surprisingly agile and effective in pursuing high-asset tax crime and tax fraud. During this time, customer service declined precipitously, backlogs became deeper, and the agency has not been able to serve its purpose as the collection agency tasked with funding our form of government.
In August of 2022, the Inflation Reduction Act provided approximately $80 billion in funds to rejuvenate the agency over a ten-year period. At the time, Treasury Secretary Janet Yellen tasked the agency with preparing a strategic plan to govern the use of the funds. The Strategic Plan was delivered in April of this year.
Some objectives of the IRS plan include the following:
- Data security: The agency plans to replace, develop, and deploy technology to ensure the IRS is competitive in its data and information security.
- Improve customer service: Customer service has been woefully lacking in recent years. The IRS plans to improve and increase its in-person taxpayer assistance offices around the country, add sufficient personnel to reduce telephone wait times, and provide robust tools for those connecting electronically with the IRS. Improvement has already occurred in the reduction of backlogged return processing and reduction of telephone wait times.
- Boost compliance capabilities: The IRS will increase its staffing to attract talent capable of conducting and participating in audits of large corporations, complex business relationships, and high-asset taxpayers. The IRS has fallen behind in its ability to examine the financial strategies of high-wealth persons and large corporate entities. The IRS notes it currently does not have the compliance staff to address its audit targets—60,000 large corporations, 300,000 large partnerships, and S corporations, and 30,000 individuals making more than $10 million per year.
When the funding increase to the IRS was announced, backlash quickly followed. Rumors were quickly spread that the IRS planned to hire 87,000 armed agents to investigate middle-class taxpayers and small businesses.
Daniel Werfel, the current nominee to lead the IRS, stated in his confirmation hearing in February of this year that “the audit and compliance priorities will be focused on enhancing I.R.S. capabilities to ensure America’s highest earners comply with applicable tax laws.”
Fair taxation at all income levels is essential for good governance. That said, there are compliant strategies to grow and nurture high-wealth portfolios. If you have questions about your wealth plan or are concerned about a potential audit, speak with an experienced tax attorney about your concerns.
Skilled legal help if you are facing an IRS audit or criminal tax charge
Serving local and international clients from offices in Chicago and Cleveland, the legal team at Robert J. Fedor, Esq., LLC provides strong representation for those with compliance questions, employment tax disputes or concerns about a tax fraud investigation. Call 800-579-0997 or contact us online today.