Possibly surprisingly, one of the attention-grabbing pieces of the large Inflation Reduction Act just signed into law is the IRS getting a total of $80 billion to increase audit enforcement. Not surprisingly, both sides of the political aisle have arguments as to how this affects their base. Does this mean regular middle-class taxpayers should be afraid of being audited? Does this mean that upper-class individuals and businesses are finally going to be held to account for taxes they should pay?
My take on it is that the answers to any of those specific questions does not matter here. After all, no one is actually (legitimately anyway) saying that a strong-armed agency is going to push people into paying more taxes than they should. This is money allocated to helping the IRS do its job better, not to do any type of new job.
Granted, what rules the IRS are enforcing are still (and always open for debate). But once those rules are in place, shouldn’t people and businesses abide by them?
So behind the rhetoric, the idea behind increased audit enforcement is attempting to force people to report legitimate tax returns. Even if as one of those prototypical Regular Joes you get audited, if you have submitted a return that follows the rules, then that audit should not cause much worry. Yes, it’s going to be stressful, yes, there’s not going to be a lot of fun moments in the process, but yes, you can back up what you did and not run into a big surprise at the end.
If you then, or anyone you know, is THAT worried about what this could mean for them, then instead of looking at it politically, maybe it is time to look at how you handle your taxes. If you do your taxes yourself and therefore do not have a professional level of confidence in them, there are a lot of people with expertise out there who can help you (we might even know one, hint, hint). If you do not do them yourself and still don’t have the confidence, well, there are lots of different people with expertise out there who can help you (and guess what, we still might even know one).
Beyond that idea, remember all the stories about how behind the IRS is behind on just doing its regular work of getting through tax returns? To think an injection of money is suddenly going to change how it goes about its work, turning it into some superpowered entity ready to take off in a new direction, is probably naïve.
In conclusion, this should only worry you if you have reason to worry. And if you have reason to worry, the best way to handle it is by getting ahead of things now and changing how you operate.
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