On December 7, 2023, the IRS announced Plans for Increased Enforcement and Fairness Efforts with New Funding
The IRS recently announced plans to enhance tax enforcement and compliance efforts focused on high-income taxpayers and large corporations. The changes come as the agency received increased funding from the Inflation Reduction Act.
The IRS stated that the new efforts will center on boosting audit rates for wealthy Americans, partnerships, and corporations after seeing sharp declines over the past decade. Improved technology and artificial intelligence will help better identify potential tax evasion.
Importantly, audit rates will not rise for taxpayers earning under $400,000 per year. The IRS also aims to add new protections for low-income filers claiming the Earned Income Tax Credit. Historically, EITC recipients have faced high audit rates compared to top earners.
IRS Commissioner Danny Werfel stated, “We will increase compliance efforts on those posing the greatest risk to our tax system, whether it’s the wealthy looking to dodge taxes or promoters peddling abusive schemes.”
Specific priorities include expanding examinations of large partnerships, investigating foreign bank account reporting violations, and addressing issues like tax avoidance in digital assets and construction contractors misclassifying employees.
In addition to enforcement, the IRS plans consumer education around common tax scams that frequently target average taxpayers. The agency remains focused on taxpayer rights and fairness amid the ramped-up compliance efforts.
We are proud of our extraordinarily low audit rate for our clients, and will continue to prepare returns in a prudent and thoughtful manner.
