A new report from the Internal Revenue Service lays out a roadmap for the future and reveals that President Joe Biden’s 2025 budget would bar cuts to the IRS until 2034.
The report also noted that audits on what the IRS calls the “wealthiest taxpayers, large corporations and large, complex partnerships” will vastly increase when the IRS examines 2026 tax returns, according to a news release on the IRS website.
The Inflation Reduction Act gave the IRS an $80 billion infusion. That was trimmed by $20 billion last spring as part of the debt-ceiling negotiations.
Since 2022, the IRS has added about 11,000 jobs and will pack in an additional 14,000 jobs by 2029, IRS Commissioner Danny Werfel said Thursday, according to CNN.
The IRS says audits are about to surge — here’s who’s most at risk https://t.co/3LIaLG6j6S pic.twitter.com/OBjVQrJQ2S
— New York Post (@nypost) May 3, 2024
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According to the release, IRS will “nearly triple audit rates on large corporations with assets over $250 million to 22.6% in tax year 2026, up from 8.8% in tax year 2019.”
The agency said it plans to have a 10-fold increase in audits of large, complex partnerships with assets greater than $10 million.
Do you agree with the IRS increasing audits of wealthy Americans?
Yes: 17% (1 Votes)
No: 83% (5 Votes)
Audit rates on taxpayers with income of more than $10 million will go from 11 percent in 2019 to 16.5 percent in 2026, an increase of 50 percent.
Not to mention the IRS is going to start massive audits on people making more than $400,000. Yeah right. Watch. People making $40,000 are gonna get nailed. https://t.co/uuHlqA7GZp
— its me (@OldBaileyFan) May 4, 2024
The release claimed that “the agency will not increase audit rates for small businesses and taxpayers making under $400,000, and those rates remain at historically low levels.”
In its strategic plan, the IRS said even with its additional cash, it will not be exceed the 2010 tax year coverage rates, for two reasons.
“First … the number of filings by large corporations, complex partnerships, and high-income individuals have grown rapidly since TY 2010 and are expected to continue to grow,” the agency said.
“Second, even within these groups, the IRS is focusing its attention on the largest corporations, the most complex partnerships, and individuals with complex international wealth holdings. These types of returns have become more complex over time and are the most time and resource-intensive audits. They’re worked by teams of accountants, economists, data scientists, and others and often take many hundreds of hours to complete.”
In the plan, the IRS said it needs to keep its budgets high, or middle-income taxpayers will suffer.
“Without additional funds, the IRS will be forced to reduce its Enforcement staff by more than 50% in FY 2030, severely hampering our ability to perform complex audits,” the plan said.
“Since lower-income taxpayers are more likely to have simple tax returns, this lack of funding will likely translate into a higher share of audits falling on low- and middle-income taxpayers, while examination coverage rates for high-income and large corporate taxpayers will severely decline,” the plan said.
Remember how all those new IRS agents were there to “only target rich people” (aka people making more than $400k) Well 63% of new audits were for people making less than $200k. pic.twitter.com/RC9dnQXUmN
— Bruce ████ 🇺🇲🇨🇦 (@BBIC0N) April 29, 2024
In the release, the IRS said that to account for what it called “funding cliffs,” Biden’s budget is a funding bonanza.
Biden’s fiscal 2025 budget has a mandatory funding plan for the IRS that could keep it at its current level through 2034, at a cost to taxpayers of $104 billion.
