Biden Administration Pursues Significant IRS Funding Increase to Boost Its Audits on Corporations and the Top 1%
This week President Joe Biden showed his commitment to auditing more wealthy individuals and large corporations with his administration’s announcement that they will be seeking more than $1 billion dollars in additional IRS funding.
The proposed increase in the fiscal year budget for 2022 would $1.2 billion, or a 10.4% increase over the 2021 authorized level. In addition, the IRS would get $417 million for tax enforcement to increase taxpayer compliance and revenues, altogether increasing enforcement resources by $0.9 billion.
This initiative highlights the Biden administration’s focus on increasing oversight of high-income and corporate taxpayers, though the final funding amount will be set by Congress. On top of the increased oversight, the funding will provide for in-person and telephone customer service improvements and new online tools to streamline the public’s communications with the agency. The increased budget will help the IRS address their audit shortfalls and technology challenges that have plagued them for years.
The proposal has received bi-partisan support as both Democrats and Republicans have shown support for reinvigorating the agency after years of budget cuts and the loss of more than 20,000 employees.
The news comes on the heels of recent reports highlighting that the IRS is struggling to handle the top 1% of taxpayers who have utilized their wealth and access to high priced tax planners to avoid reporting their full income. A recent paper published last month estimated the top 1% of households fail to report about one-fifth of their income due to IRS audits failing to detect the most sophisticated tax evasion strategies.
For more information on the funding hike and what it will mean for your next tax filing, contact us here.