The IRS' new tax plan will change how everyone pays taxes — especially the rich

 

The IRS' new tax plan will change how everyone pays taxes — especially the rich.

The new $80 million IRS plan will change how everyone pays taxes—especially the rich.

The Internal Revenue Service (IRS) has released its long-awaited report on how it plans to publish the $80 billion earmarked for the agency under the administration's Inflation Reduction Act. According to the report, one of the IRS's goals is to focus its audits on wealthy Americans.

"We will improve our efforts to help ensure that the appropriate amount of tax is paid and to promote future compliance," the agency said in the report. She added that according to Treasury guidance, small businesses and households earning $400,000 or less will not see an increase in audit rates compared to historical levels.

"We will increase our focus on segments of taxpayers with complex problems and complex returns where audit rates are minimal today, such as those for large partnerships, large corporations, and high-income, high-wealth individuals," the IRS said, adding that the use of modern data analysis tools can simplify this effort significantly.

According to the report, more than half -- $47.4 billion -- of the total budget will be allocated to this effort, of which $41.7 billion is for implementation alone.

The IRS said: "The increasing breadth and complexity of tax administration, along with the sophisticated ways some taxpayers attempt to evade them, have outstripped our resources and ability to monitor compliance and bridge the gap between taxes owed and collected."

As Politico notes, the IRS still needs to detail how it plans to align with Treasury Secretary Janet Yellen's pledge not to increase audits on those with incomes of less than $400,000.

"This is a real challenge — first determining who is safe from the undertaking without actually conducting an audit to determine if their real (actual) income is less than $400,000, and then determining the appropriate 'historic' audit rate to apply to taxpayers who have taxpayers who have had a tax return," said Janet Holtzblatt of the Center. Politico's tax policy: "Income less than $400,000."

Additional goals for the IRS include updating and upgrading its technology, hiring more employees, and improving customer service to make it "global."

According to the report, the Congressional Budget Office estimates that an additional $80 billion provided to the IRS by the ACPC would increase federal revenue by more than $180 billion.

In a blog post, a national taxpayer advocate, Erin Collins, said that while she supports the IRS plan, the money is "disproportionately allocated to implementation."

"I believe Congress should reallocate IRS funding to balance taxpayer service needs and IT modernization better," Collins said in the post.

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