What does the Inflation Reduction Act mean for taxpayers?

What does the Inflation Reduction Act mean for taxpayers?

A 2022 IRS tax audit data study found that a taxpayer in the lowest income bracket is five times more likely to face an audit than a member of the highest income bracket.

"The IRS's correspondence audit process is structured so that it spends the least amount of resources to conduct the highest number of checks—resulting in the lowest level of customer service for taxpayers who need the most help," said National Taxpayer Advocate Erin M. Collins. The report is during an annual report to Congress.

The Transaction Records Access Clearing House (TRAC) of Syracuse University examines the IRS's Internal Revenue Administration reports each month, and the group noted various trends by reviewing 2022 data. Bigger on automatically generated letters sent to taxpayers.

The data showed that the Tax Authority conducted 85% of its audits through these letters, which request additional information and documents related to specific items of interest. Total audits decreased from 659,003 in the fiscal year 2021 to 626,204 in 2022 out of 164 million income tax returns filed last year.

The income tax check rate for those in the lowest income group was 12.7 per 1,000, compared to 2.3 per 1,000 among those in the highest groups - nearly five times as much. The odds of a millionaire facing an audit was about 1.1%.

This roughly matches similar numbers — 13 per 1,000 and 2.6 per 1,000, respectively — during fiscal 2021, but that rate has nearly doubled from fiscal 2020 when the lowest income bracket saw 7.9 checks per 1,000.

The TRAC report alleged that a lack of interest in millionaires resulted from "severe budget cuts over the years" that forced the IRS to shift its focus to "soft markers in an era when the IRS increasingly relies on correspondence audits yet has no resources to assist taxpayers." or answer their questions.

A White House spokesperson told Fox News Digital that "President Biden's Inflation Reduction Act, which is just beginning to force enforcement for wealthy Americans, will finally force scammers to pay their fair share while making it easier for working Americans to get their taxes back."

The spokesperson also blamed Republicans for attacking IRS funding "for years" and claimed that millionaire tax cheats account for $163 billion in tax evasion annually.

The Inflation Control Act provides the IRS with $80 billion in future funding to step up its audits and potentially target wealthier taxpayers.

0/Post a Comment/Comments