One of the goals of the Inflation Reduction Act is to set aside $79.6 billion for the Internal Revenue Service (IRS) to use over the next decade. The proposal sets aside the majority of these funds for enforcement efforts. But what should taxpayers know about this proposal? What would it actually mean? The following three points are some of the more important to help make sure you have a basic understanding of what may come in the near future.
#1: The IRS states it will focus on high-net-worth taxpayers and corporations
The IRS and government officials repeatedly state that these efforts will focus on high-net-worth individuals who fail to meet their tax obligations — but what does that mean? A recent piece in CNBC notes that President Biden and his administration have pledged not to increase the audit rates for those who earn less than $400,000. Take note, it does not say they will not come after taxpayers who fall within this group, just that the rate will not increase over the current norms.
#2: The proposal is not popular with all lawmakers
The Hill notes that Republican lawmakers are “fuming” about the proposal, calling the funding “reckless” and pushing for additional scrutiny before the proposal moves forward.
IRS chief Charles Rettig counters these concerns, stating increased enforcement efforts will only focus on large corporations and wealthy taxpayers who allegedly manipulate the tax code in an effort to avoid their tax obligations.
#3: The Inflation Reduction Act is not yet law
The current proposal needs to make its way through the House before President Biden has the option to sign it into law. Until then, it is not yet official.
We will provide updates as they become available.
Regardless of the status of this law one thing remains clear: the IRS is looking for ways to crackdown on those who fail to meet their tax obligations. There are options for those who believe they have not met tax obligations in the past. Proactive compliance measures can help reduce the risk of criminal charges. The attorneys at Goldburd McCone are familiar with these matters and can discuss your options, better ensuring your legal rights are protected throughout the process.