When the Inflation Reduction Act was passed with increased funding for the IRS, the agency promised that it was going to pursue high-wealth entities that were not fulfilling their tax obligations. This apparently has been working well as last week the IRS announced that collections from these activities have surpassed the $1 billion mark.
When breaking down tax totals, those totals can start to seem astronomical. For on the one hand, getting a billion dollars sounds great. The government should definitely be able to do something with that much money, right? (Feel free to insert your own joke here). The agency has collected this money, however, by focusing on only 1,600 individuals with incomes of more than $1 million per year and who owed more than $250,000 in tax debt. When such a small number of individuals can garner that much money, it seems that this tactic may just be working. IRS Commissioner Danny Werfel only agrees: “With this collection activity, the IRS passed an important milestone in our effort to improve compliance and ensure fairness in the tax system. Our increased work in this area means these past-due tax bills from high-end taxpayers are no longer being left on the table, like they were too often in the past. “Years of funding declines meant the IRS couldn’t get to money that we knew was owed, but we simply didn’t have the resources or staffing to collect. Funding from the Inflation Reduction Act is reversing a decade-long decline in our compliance work, including increasing our compliance work involving the wealthiest individuals and groups with tax issues. The collection results achieved in less than a year reveal the magnitude of what can be achieved over the long run as our Inflation Reduction enforcement continues to ramp up in the months ahead.” Of course, this is not going to end the debate over how much money the agency should receive in the future. That push and pull along party lines is about more than the funding’s effectiveness. I did, however, feel that it was important to point out that so far it is proving effective. Of course, questions remain about if the effectiveness would decrease with time. For now, however, let’s give credit where it’s due. It is still a BILLION dollars after all. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter To ensure we don't make the folks at the IRS ornery, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
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