Thune expressed concerns about the disproportionate focus on enforcement, saying it could lead to increased audits and scrutiny for ordinary taxpayers.
The IRS has defended its hiring practices, stating that the new hires are necessary to improve tax compliance and combat tax evasion. The agency has also reiterated that audits will not increase for Americans making less than $400,000 per year, despite concerns raised by watchdogs and lawmakers.
Thune pointed out that the heavy emphasis on increasing hiring in the section appeared to be disproportionate.
âSweeping, Historicâ Enforcement Crackdown
In September 2023, the IRS announced a significant shift in all aspects of its operations, including a âsweeping, historicâ tax enforcement crackdown to boost tax collections.
The major changes are driven by cutting-edge technologies, such as artificial intelligence, which are intended to assist IRS compliance teams in better detecting âtax cheatsâ and identifying tax compliance loopholes to maximize the agency’s revenue from taxpayers.
According to IRS estimates, American taxpayers pay approximately 85 percent of the total taxes they owe, leaving a gap between what is owed and what is actually paid.
Between 2014 and 2016, the IRS estimated that the annual tax gap was around $496 billion.
The primary objective of the IRS’s intensified tax enforcement efforts is to reduce the tax gap, with specific groups of taxpayers bearing the brunt of these initiatives.
The IRS has announced that it will prioritize enforcement actions on taxpayers with total positive income exceeding $1 million and who have more than $250,000 in recognized tax debt.
The agency has allocated numerous agents to this category of taxpayers in fiscal year 2024, with plans to reach out to approximately 1,600 taxpayers who collectively owe hundreds of millions of dollars in taxes.
Another enforcement focus is on the IRS Large Business & International Divisionâs Large Corporate Compliance (LCC) arm, which is expanding to audit an additional 60 major corporations with an average asset value of over $24 billion.
A separate enforcement effort targets the abuse of a corporate tax break that was eliminated several years ago, while a fourth initiative is aimed at individual taxpayers earning over $1 million annually and with over $250,000 in recognized tax debts.
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