Robbin B Brophy, EA
On Sun, Aug 7, the US Senate passed the Inflation Reduction Act of 2022 (IRA). A portion of funding contained in the IRA is to be utilized to expand operations within the IRS. Many false accusations have been made regarding the funding for IRS. The following are some of the misperceptions and the reality of how IRS intends to utilize the resources.
False Statement: The IRS is hiring 87,000 armed special agents to harass taxpayers.
Reality: IRS intends to hire new staff to answer phones, work on processing tax returns or go after high-end taxpayers or corporations who are avoiding taxes. Less than 1% of new hires will be in the IRS Criminal Investigation (IRS-CI) area which currently has about 2,100 special agents and is hiring about 300 more. These agents investigate criminal tax issues such as money laundering, Bank Secrecy, National Security and National Defense issues. They have been involved in dismantling terrorist financing efforts and criminal cartels as well as the elimination of child exploitation operations in the Dark Net. They do not perform audits of tax returns. They are law enforcement officers and are the only IRS employees who carry firearms.
False Statement: All IRS employees – and those being hired – will carry firearms.
Reality: More than 97% of IRS employees do not carry firearms. This includes civil enforcement personnel such as revenue agents, examiners and others involved in audits and compliance work.
False Statement: The additional funding will be used to hire more auditors to “shake down” average taxpayers.
Reality: The resources are not about increasing audit scrutiny on small businesses or middle-income Americans. Instead, the added resources will be focused on large corporations and high net-worth taxpayers to enforce laws that IRS currently does not have the resources to pursue. The funding will be spread over ten years and will add employees gradually as IRS modernizes operations with technological enhancements. IRS has one of the oldest workforces in government and staffing has been in decline for many years. More than 50,000 employees will retire in the next few years. In 1992, IRS had 117,000 employees – 38,000 more than today and back then IRS dealt with fewer taxpayers. The funding should help IRS employees provide better assistance to taxpayers.
In other news, IRS announced on Aug 24 that to help struggling taxpayers affected by the COVID-19 pandemic, IRS plans to provide penalty relief for certain 2019 and 2020 returns and that they will be refunding $1.2 billion in penalties to taxpayers. For more information, look for Notice 2022-36 on the IRS.gov website. To qualify for this relief, any eligible tax return must be filed on or before September 30, 2022.
Robbin Brophy is an enrolled agent, licensed by the US Dept of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. Call (828)558-4300 for more information.
Originally published in Positively Haywood, October 2022