The recently passed “Inflation Reduction Act” contained a provision aimed substantially increasing the IRS’s enforcement capabilities. This increased the IRS budget by roughly $80 billion for the next 10 years. According to the Tax Foundation, $45.6 billion of that budget increase will go toward enforcement—a 69% increase. Additionally, according to the Tax Foundation, the IRS budget increase is projected to raise $203 billion in gross revenue and $123 billion in net revenues.
The Department of the Treasury pledged that this increased enforcement budget will not be used to expand audits of small businesses and households making less than $400,000 per year. The inference is that the increased budget will be targeted toward increased IRS compliance action against families and businesses above that threshold. Time will tell exactly what types of tax issues the IRS will focus its attention upon.
At the outset of IRS action, it is important to obtain quality legal representation to ensure actions are being taken to preserve available options. It may be advisable to bring in legal representation alongside an accounting firm that may be initially addressing the matter with the IRS to ensure that the best possible record is being established should the matter need to be taken to Tax Court. Lamson Dugan & Murray has significant experience in defending clients facing IRS compliance action, including Tax Court trial experience. If you find yourself in a difficult situation, please give us a call or contact us, here.