The IRS recently revealed its plans to use $80 billion in extra funding.
The Internal Revenue Service has a plan for how it wants to use $80 billion to revamp the agency, and revive high-end audits.Wally Adeyemo, the deputy secretary at the Treasury Department, said Monday he knows the tough job that’s ahead.
— Wally Adeyemo, Treasury Department deputy secretary “The challenge, of course, is that it takes a lot longer to audit someone who makes their money in various ways than to audit somebody who makes their money through a W2,” Adeyemo added. But that’s where the money is, he said. The federal government is missing approximately $160 billion annually in tax revenue that the top 1% of taxpayers do not turn over, Adeyemo estimated.
Just over 9% of tax returns worth at least $10 million were audited for tax year 2018, according to the IRS on Friday. While that’s up from a 5.8% audit rate for tax year 2017, it’s down from 13.6% for tax year 2012, the agency noted. Treasury and IRS officials have said the extra money for enforcement will not result in extra audits for households earning less than $400,000 a year.
The numbers also show the “continued resource constraints have limited the agency’s ability to address high-end noncompliance,” the agency said in a statement last Friday. But that should change as the Inflation Reduction Act money flushes in, the IRS noted.
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