The IRS says it is about to ramp up audits as it cracks down on tax cheats and seeks to deliver more revenue into the U.S. Treasury's coffers. But not every group of taxpayers will face more scrutiny, according to IRS commissioner Danny Werfel.

The IRS has been bolstered by $80 billion in new funding directed by the Inflation Reduction Act (IRA), which was signed into law in 2022 by President Joe Biden. The idea behind the new funding was to help revive an agency whose ranks have been depleted over the years, leading to customer service snarls, processing delays and a falloff in audit rates.



On Thursday, the IRS outlined its plans for the funding, as well as its efforts so far to burnish the agency's customer service operations after some taxpayers encountered months-long delays during the pandemic. The IRA money has helped the IRS answer more taxpayer calls during the tax season that just ended on April 15, as well as beef up its enforcement, which led to the collection of $520 million from wealthy taxpayers who hadn't filed their taxes or still owed money, it said.

"The changes outlined in this report are a stark contrast to the years of underfunding" that led to a deterioration in the agency's services, Werfel said on a conference call with reporters.

Werfel noted that the IRS' strategic plan over the next three tax years include a sharp increase in audits, although the agency reiterated it won't boost its enforcement for people who earn less than $400,000 annually — which covers the bulk of U.S. taxpayers.

Here's who will face an increase in audits

At the same time, the IRS is increasing its audit efforts, with Werfel noting on Thursday that the agency will focus on wealthy individuals and large corporations:

The IRS plans to triple the audit rates on large corporations with assets of more than $250 million. Audit rates for these companies will rise to 22.6% in tax year 2026 from 8.8% in 2019.Large partnerships with assets of more than $10 million will see their audit rates increase 10-fold, rising to 1% in tax year 2026 from 0.1% in 2019.Wealthy individuals with total positive income of more than $10 million will see their audit rates rise 50% to 16.5% from 11% in 2019.

"There is no new wave of audits coming from middle- and low-income [individuals], coming from mom and pops. That's not in our plans," Werfel said.

But by focusing on big corporations, complicated partnerships and wealthy people who earn over $10 million year, the IRS wants to send a signal, he noted.

link: https://finance.yahoo.com/news...heres-172149190.html

This message has been edited. Last edited by: ZSMICHAEL,

Fix that subject line, please. Give your thread a name and remove that link from the subject line. You're not new at this.

Forgive me for how my brain works, but we spent 80 billion to find 520 million? If that's true I know who to thank.

quote:

although the agency reiterated it won't boost its enforcement for people who earn less than $400,000 annually — which covers the bulk of U.S. taxpayers

As of 2021 (the last available year the IRS posted), the returns with more than $500k of adjusted gross income paid 50.3 percent of the income tax collected. That represents about 2.5 million returns out of 161 million returns submitted.

(They don't have a cut-off at $400k in the spreadsheet I'm looking at.)

A mere 1.5 percent of taxpayers (by return) contributed more than half of the income tax after credits. This statistic underscores the concentration of the tax burden among a small fraction of the population.

So the left keeps saying the rich need to "pay their fair share." Nice slogan... Flat out, ask them what percentage the top 1 or 2 percent should be paying. I've done it; the results prove how brainwashed and out-of-touch they are.

Sure, a few of the $500k+ earners probably "cheat" a bit, but the IRS's "return on investment" will not be there. The number of "tax cheats" in that category ($500k+) will be minuscule. They don't get paid in cash and hide it in the safe.

This is for optics and optics only. Either that or they are lying and will look for more money from those earning $100k to $500k.

Spreadsheet - https://www.irs.gov/pub/irs-soi/21in11si.xls

I don’t believe a word of it. Biden let it slip a few years ago when he was talking about adding 87,000 new IRS agents and how they will essentially pay for themselves by collecting more revenue. The reporter asked him if they were going to go after big corporations and he said “no they have good lawyers and will keep us tied up in court too long”.

So essentially they are going after the middle class. I’m sure they took a bunch of heat for that slip up and now word it differently so that it seems they are just going after the big bad corporations.

quote:

But not every group of taxpayers will face more scrutiny, according to IRS

Hmmmm.... Which groups will?
It's not like the Government would weaponize the IRS against certain people or groups they don't agree with.

Gee are large corporations really cheating on their taxes that much? I would not think so, at least to the point they think the amount of money they can recoup. It's not like Jeff Bezos himself is doing Amazon's taxes with Turbo Tax deluxe version. I bet taxes can be extremely complicated for the big corporations though and honest mistakes can be made in interpreting tax laws. Personally I believe we need to get back to the point where everyone with income has some skin in the game and get away from this silly crap where people can get bigger refunds than the taxes they paid due only to having low enough income and I am tired reading about how a school teacher pays more taxes that Elon Musk which is a total lie.

quote:

Originally posted by 1s1k:
I don’t believe a word of it. Biden let it slip a few years ago when he was talking about adding 87,000 new IRS agents and how they will essentially pay for themselves by collecting more revenue. The reporter asked him if they were going to go after big corporations and he said “no they have good lawyers and will keep us tied up in court too long”.

So essentially they are going after the middle class. I’m sure they took a bunch of heat for that slip up and now word it differently so that it seems they are just going after the big bad corporations.

I didn't need Biden to let the cat out of the bag for me to figure that out. He wasn't suppose to say it but that's exactly what I thought. I really rich people can afford the accountants and lawyers they need.

The biggest problem with IRS are the computer letters concerning 1099's. 1099's are many times inaccurate & misunderstood by most taxpayers. I have a Dentist client that received a bill from IRS for $20000. After hours of research we discovered that Dental Insurance companies that were paying with credit cards duplicating the 1099's & he owed $0. A client that sold her home for $450,000 after her husband died got a bill from IRS for $200,000 & she owed $0. Retail clients that collect sales tax are receiving IRS bills for not including collected state sales tax in gross income on the tax return. It goes on & on. Those letters are not considered audits by IRS.

Wait until eBay, Gunbroker, Venmo, PayPal, Zelle, and a host of other online electronic funds and seller venues start issuing 1099-K forms for income received over $600. Re-selling your hobby collections will have to be itemized like stocks on a schedule D. While business income gets to net all profits and losses, hobby income is treated much differently. Each item has a max loss of zero to carry over to the next item. Here is an example. I buy two guns and pay $600 each. A few years later I sell them for $1100 a net loss of $100. Since I am not an FFL and buying/selling firearms is considered a hobby. If one firearm sold for $700 and one sold for $400, I would owe nothing in the gun the sold for $400 ($600 basis - $400 sale $ = -$200) but hobby losses are capped at zero. That means the $200 loss cannot be applied to the $100 gain on the second firearm. This is why the IRS is hiring so many auditors. If you sell your unwanted stuff keep detailed records and use cash as much as possible. The democrats think that all money that changes hands electronically is all taxable. This is going to create huge problems for people and you have to prove you do not owe what the government tells you that you owe. Without purchase records it will be hard to come out on top in an audit. It’s another reason why the government is pushing hard for a cashless society.

It is not going to be high net worth and large business and international taxpayers who will bear the brunt of increased audits. My guess is that sole proprietors, closely held partnerships and LLCs, and non-filers/under-filers who have unreported 1099 income will be getting contacted. That means folks well under 400k in AGI will be getting hosed even further in Biden's America.

Getting form computer paragraph letters or system generated balance due notices aren't audits. They're a nuisance, as there are systemic problems with IDRS and the reporting software built on top of it. With the right documentation, you can resolve those issues. An actual audit with an RA assigned is another deal entirely.

If you have your own small business, the best thing you can do is to stay organized and maintain spreadsheets, accounting software, and images of bills and invoices justifying reported P&L and expenses. If you go into it expecting an audit, when that day actually comes you'll be prepared and can take the initiative. It would also make sense to be working with an experienced accountant to review your books and get feedback on potential issues.

quote:

Originally posted by steve495:
This is for optics and optics only.

They even admit it, "send a message" AKA frighten the law-abiding tax payers who are legitimately afraid of making an honest mistake, or missing something in the inundation of data that arrives during tax prep. season.

quote:

Either that or they are lying

Both could be true, it doesn't have to be "or." In fact, the IRS lying is anti-news (something that would be news if it weren't true).

And right on cue, some family friends were just notified of an impending audit. They make less than 100k a year combined, and she does marketplace, ebay and daycare from home to supplement income in Biden’s America. With my government pension, second job, and the little missus doing eBay, marketplace, and an antique booth making under 70k, I completely expect to be hearing from the assholes as well in the not too distant future.

Are there any legal groups one can join and they are experienced and will go fight the IRS for you? Or do you generally need to find an experienced tax attorney and use them?

With homeschooling one pay can join the HSLDA, then if the local public school starts playing games the HSLDA can step in and use legal actions to make them follow current law.

The IRS is going to be sure they select who to audit equitably. Since they have been disproportionately auditing blacks, obviously there is systemic racism in the audit selection criteria rather than higher odds of error or fraud when certain kinds of things appear in the returns.

https://www.ksl.com/article/51...ers-and-other-filers

Huh... so DEI comes to the IRS?

quote:

WASHINGTON — The IRS said Thursday that it has taken steps to address a wide disparity in audit rates between Black taxpayers and others filers, and is more closely examining the returns of larger numbers of wealthy people and major companies.

"We are overhauling compliance efforts to advance our commitment to fair, equitable, and effective tax administration and hold ourselves accountable to taxpayers we serve," according to an annual update from the agency.

A study from January 2023 involving university researchers and the Treasury Department found that IRS data-driven algorithms selected Black taxpayers for auditing at up to 4.7 times the rate of non-Black taxpayers. The study said the IRS disproportionately audited people who claim the Earned Income Tax Credit , which is aimed at low- to moderate-income workers and families. While Black taxpayers accounted for 21% of the claims for that break, they were the focus of 43% of the audits concerning the credit.

For anyone who don't know...
The Earned Income Tax Credit is a "refundable credit" for low income "taxpayers".
What it means is that people with no tax obligation get money back. It puts them in a negative tax bracket. It's a form of welfare payment.

How much is "fair"?
This class warfare demonizing of the rich only leads to destruction. Is it somehow more noble to pay nothing, get welfare, and live off of other people's work? Fully half of the people in this country pay no federal income tax.

Biden Wants The Wealthy To Pay Their "Fair Share", What Percentage Is That?

By Mish Shedlock of MishTalk

What percentage of all income tax collection should the top 1 percent pay? Top 10 percent?

Summary of the Latest Federal Income Tax Data

Inquiring minds may wish to peruse a Summary of the Latest Federal Income Tax Data, 2024 Update by the Tax Foundation.

I downloaded their data and created all but one of the charts in this post. The Foundation calls it the 2024 update but the latest data is for 2021.

The bottom half of taxpayers, or taxpayers making under $46,637, faced an average income tax rate of 3.3 percent. As household income increases, average income tax rates rise. For example, taxpayers with AGI between the 10th and 5th percentiles ($169,800 and $252,840) paid an average income tax rate of 14.3 percent—four times the rate paid by taxpayers in the bottom half.

The top 1 percent of taxpayers (AGI of $682,577 and above) paid the highest average income tax rate of 25.93 percent—nearly eight times the rate faced by the bottom half of taxpayers.

Income tax after credits (the measure of “income taxes paid” above) does not account for the refundable portion of tax credits such as the EITC. If the refundable portion were included, the tax share of the top income groups would be higher and the average tax rate of bottom income groups would be lower. The refundable portion is classified as a spending program by the Office of Management and Budget (OMB) and therefore is not included by the IRS in these figures.

The only tax analyzed here is the federal individual income tax, which is responsible for more than 25 percent of the nation’s taxes paid (at all levels of government). Federal income taxes are much more progressive than federal payroll taxes, which are responsible for about 20 percent of all taxes paid (at all levels of government), and are more progressive than most state and local taxes.

AGI is a fairly narrow income concept and does not include income items like government transfers (except for the portion of Social Security benefits that is taxed), the value of employer-provided health insurance, underreported or unreported income (most notably that of sole proprietors), income derived from municipal bond interest, net imputed rental income, and others.

The top 1 percent pay an average of $653,730 in Federal income taxes. The top 10 percent pay an average of $108,251 in Federal income taxes.

The Tax Foundation reports the bottom 50 percent pay an average of $667 but that is overstated.

Counting child tax credits, earned income, food stamps, and rent support, the bottom 50 percent pay negative taxes. They get much more back than they put in.

https://www.zerohedge.com/mark...hare-what-percentage

This message has been edited. Last edited by: chellim1,

Taxation without representation!

^^^ I guess what I'm suggesting is the opposite... representation without taxation. Half of the people in this country have no incentive to limit government. They always want the government to do more.

It's a system that is encouraging envy which only leads to destruction.