IRS IRA STRATEGIC PLAN: WHAT TO EXPECT
/The Internal Revenue Service (IRS) released its strategic plan to transform and improve its tax services over the next 10 years. The Strategic Operating Plan is made possible through roughly $80 billion in funding over 10 years from the Inflation Reduction Act.
The plan is structured to achieve five objectives:
1. Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible.
2. Quickly resolve taxpayer issues when they arise.
3. Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap.
4. Deliver cutting-edge technology, data, and analytics to operate more effectively.
5. Attract, retain, and empower a highly skilled, diverse workforce and develop a culture that is better equipped to deliver results for taxpayers.
This article focuses on objective 3, enforcement, which has seven parts:
3.1 Employ centralized, analytics-driven, 3.1 risk-based methods to aid in the selection of compliance cases: the IRS will use improved analytics to aid in the selection of cases predicted to be at risk of noncompliance, choosing enforcement treatments that maximize opportunities to improve and sustain taxpayer compliance while ensuring fairness in selection.
3.2 Expand enforcement for large corporations: The IRS will increase enforcement activities to help ensure tax compliance of large corporate taxpayers.
3.3 Expand enforcement for large partnerships: The IRS will increase enforcement activities to help ensure tax compliance of large partnerships.
3.4 Expand enforcement for high-income and high-wealth individuals: The IRS will increase enforcement activities to help ensure tax compliance of high- income and high-wealth individuals.
3.5 Expand enforcement in areas where audit coverage has declined to levels that erode voluntary compliance: The IRS will increase enforcement activities in other key areas where audit coverage has declined while complying with Treasury’s directive not to increase audit rates relative to historical levels for small businesses and households earning $400,000 per year or less.
3.6 Pursue appropriate enforcement for complex, high-risk and emerging issues: The IRS will enhance detection of noncompliance and increase enforcement activities for complex, high-risk, and novel emerging issues, including digital assets, listed transactions and certain international issues
3.7 Promote fairness in enforcement activities: The IRS will help promote fairness for all taxpayers by addressing noncompliance appropriately in a balanced manner.
Comment: It is apparent with the AI revolution the IRS plans to leverage technology to increase audits all across the board. While the IRS states their focus will be large corporations and partnerships, other audits will increase to relative “historical” norms which does not appear to include the recent few years. There were more audits a decade ago. Taxpayers should review their compliance and make corrections where warranted. The IRS intends to phase in the plan over the next few years with a first hiring waive to implement the above plan in 2023. Individual taxpayers who should be particularly concerned are, among others, high net worth individuals with foreign activities or that have digital assets.
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