By means of the Inflation Reduction Act, which was signed into law in January of this year because the IRS recently provided the organization with $80 billion in new financing.
How the IRS will use its additional $80B in money is a natural concern given the size of the cash injection.
Warning: the outcome may not be what you were hoping for.
Impact of IRS Additional Funding
In late March, the Department of Treasury unveiled its strategy for using the additional cash for the IRS.
Small business owners should pay special attention to where the IRS will focus its spending as the money will be used over the coming ten years.
The IRS reportedly fielded a record 282 million calls in 2021, according to the National Taxpayer Advocate’s Annual Report to Congress.
32 million of those calls, or 11%, were addressed by customer service agents and their response rate increased marginally to 13 percent in 2022.
According to IRS Commissioner Danny Werfel, the organization had already hired 5,000 customer service agents and as of February 2023 had handled 1 million more calls than during the previous filing season and decreased average wait times by around four minutes.
Many people who have struggled to get help from the IRS to solve time-sensitive concerns find this increase in the staff to be welcome news.
It increases its enforcement action as a result of the funding given to more auditors.
An anticipated return on investment (ROI) is used to justify the agency’s request for this considerable funding increase.
Again, this is bad news for taxpayers so the Congressional Budget Office (CBO) forecasts a ROI ranging from 500 to 900 percent.
Read more: IRS Recommends Free Online Paycheck Withholdings Tool To Prevent Potential 2023 Tax Bill
Being Vigilant is a MUST for Small Company Owners
History shows that the it is successful in recovering millions of dollars from taxpayers when it increases the number of audits it conducts.
So small company owners must be vigilant now more than ever to reduce their audit risk and defend themselves against the IRS.
It goes without saying that taxpayers will be alarmed to learn that the IRS is investing more money and personnel in enforcement actions.
Making the appropriate decisions for this tax season and future will depend on your knowledge of the agency’s plans and your ability to defend yourself.
Read more: Tax Rebate: New Mexico Taxpayers Should Expect Some Additional Money Up To $1,000
