Now that tax season is over and there has been some chance for recovery, let’s look at where we go from here. Next week I will address where you can on a more personal basis, but for now I want to look at things on an institutional basis.
First, don’t look for any huge changes in how the tax system looked from this season to next year. Granted, with Democrats in control of the House of Representatives, they are able to make more noise about the president’s Tax Cuts and Jobs Act, but the party does not have the wider power that would be necessary to make widespread, sweeping changes. This year we did get some relief for those who did not have enough withheld from their paychecks to not have to pay as many fines to the IRS, but that was about it as far things went for changes since the start of the year. There was even just talk of trying to extend the tax deadline and that went away pretty quickly. So the rules are here to stay at least for now.
Beyond that, though, there may be some changes coming for the IRS itself. Last week the agency announced that it had a six-year plan to update its information technology systems. As a taxpayer, this is a positive for it should lead to enhanced security and may even help the agency with its service and the speed (and the current lack of it) at which it happens. The fact that this is going to take six years tips off the fact that the IRS is not swimming in money. Of course, it is a big, sprawling institution that does not exist in just one spot, but six years to redo some systems is a timeframe that seems to say it can’t afford to do it all at once. President Trump, however, has started to say that IRS may need some more money, calling for funding to be used for tax enforcement.
Financial cuts at the agency have been going on for years, resulting in extremely low levels of audits. From a budgeting perspective, one can’t be faulted for looking at increasing enforcement, for there must be a level where enough success in that area would pay for itself. At the same time, it feels dangerous, though, for the words ‘enforcement’ and ‘taxes’ just go together in a frightening way. Again, though, I say these are only positive changes. You can debate what tax laws should be, but shouldn’t everyone fairly pay what they are required under those laws? Both enhanced enforcement and better technology will only help with this.
And for those who follow the rules, there should not be any huge worries here. An audit is never fun, but if you did what is allowed under the law, then it will only be a nuisance. If you want to make real changes, the place to put your efforts is not in these large institutional areas, but to do what you can for yourself in your own personal situation.
So come back next week …
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