Prepare for More IRS Audits!

The IRS is significantly enhancing its audit capabilities thanks to an infusion of $60 billion over the next ten years. This funding, although less than the initially proposed $80 billion from the Inflation Reduction Act of 2022, will enable the IRS to hire more experienced personnel and increase audit activity across the board.

The IRS's new financial resources allow it to hire mid-career professionals who can begin working effectively immediately, a shift from the previous practice of hiring and extensively training new graduates. This approach will help the IRS ramp up its audit activities much more aggressively in a shorter amount of time. 

The IRS has already increased its revenue agents by about 9% from the previous year, and audit activities are expected to rise, especially among high-income individuals, partnerships, and corporations. The IRS will now have sufficient resources to pursue multiple priorities simultaneously without having to choose between one or the other.

Commissioner Danny Werfel noted in March that the IRS has concentrated enforcement efforts on high-income individuals, issuing notices to 125,000 people who failed to file federal income tax returns since 2017, including 25,000 with incomes over $1 million. The IRS has also been auditing corporate jet usage and has collected $520 million from taxpayers since mid-2023.

The IRS will focus on several key areas during audits, including research and development credits, partner capital accounts, energy credits, and digital assets.

The agency plans to use new technology in their audit process, aiming to increase their effectiveness by selecting cases that are more likely to lead to a collection. Overall, the IRS's increased funding and new hiring strategy represent a significant transformation in its operations, promising more comprehensive and effective audits in the coming years.

TRANSLATION: MAKE SURE YOUR TAXES ARE IN ORDER!

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