After months of wondering just how it would play out – and if it could play out without the government being shut down – the government passed a spending bill last week that effectively funds everything the government will do. If you are interested in a larger overview of what’s included, this article from Forbes does a good job of that. In this space, however, I want to concentrate on the tax implications of it.
First, I feel like the Tax Cuts and Jobs Act comes up every week in some form or other, but the spending bill includes money whose specific purpose is for implementing tax reform. This sounds like a great thing, for we want the IRS to be ready for all the new rules and make next tax season as smooth as possible, but the fact that an extra $320 million has been slated to make sure that happens has to give anyone pause. If it takes the IRS that much money to figure it out, how is a taxpayer supposed to be able to get through it all?
Beyond that, the IRS is getting an overall bump in its budget, with its $11.4 billion allocation representing a $196 million jump from last year’s number after years of cuts. That money is earmarked for the agency to modernize its system and increase customer service. With the horror stories that have increased in recent years over how long it can take to actually get anyone from the IRS on the phone, we can only hope this move toward customer service helps that.
In fact, there is even a provision in the bill requiring an employee training program that will include “dealing courteously with taxpayers.” This sounds nice, but then again, one would hope that being courteous was already a general rule.
Overall, $2.5 billion of the IRS’s slate is for taxpayer services. This includes $5.5 million set for identity theft casework. When one sees how small that number is compared to the overall budget, it shows that scams may not be TOO terribly widespread if they can be handled with that amount, but it can also speak to the need for personal vigilance because the IRS is also not spending a TOO terribly great amount of money in the area.
I have written in the past about how the decreased funding for the IRS in recent years has resulted in a lower number of audits. Although it seems that much of its uptick in funding is slated for other areas, I would not be surprised to find that it leads to the number of audits leveling off, if not increasing.
I do not believe that this means anyone should be in greater fear of being audited. Rather, as I always say, your best protection against an audit is filing a legal tax return. Sure, there will still always be some things that trigger an audit, and you can never be guaranteed that you will not face one. You can, however, be guaranteed that an audit will only be a nuisance (granted, possibly a huge one) if there is nothing in your tax return with which the IRS can find fault.
So yes, the tax laws as changing, the tax agency is changing, but there are some things that will always remain the same. And we are happy to also remain and help you through the new landscape with the same high-quality service that you have always been able to count on.
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