The Inflation Reduction Act of 2022 has been a significant point of conversation since its inception and approval. As a historic reconciliation package for the United States, one of the main points of controversy has been the funding delegated to the IRS. While there is much speculation about what the IRS will do with the funds and how it will impact US taxpayers, the IRS has assured they will not use it to target taxpayers through audits or other enforcement. IRS Commissioner Chuck Rettig stated that “these funds will help us in many areas, including adding critical resources to not just close the tax gap but meaningfully improve taxpayer service and technology. This will also allow the IRS to provide services to taxpayers in the manner they expect and deserve.”
Part 3 of Title I, Subtitle A of the draft Inflation Reduction Act (IRA, H.R. 5376, as passed by the Senate on August 7, 2022) would grant the Internal Revenue Service (IRS) and related agencies a total of $79.6 billion, to remain available through the end of FY2031, to “bolster taxpayer services and enforcement of the tax code, among other purposes.” The main appropriations to the IRS are enforcement, operations support, taxpayer services, and business system modernization. Contrary to the public’s discourse, the Inflation Reduction Act did not grant funding solely for the IRS to use to audit taxpayers. Instead, it is to be utilized across the IRS’s needs as an agency and service for US taxpayers.
Despite claims that the additional funds will be used to hire 87,000 new IRS agents to audit taxpayers, Chuck Rettig pledged to spend the money on other priorities outlined within the parameters of the Inflation Reduction Act. The money granted to the IRS will significantly aid the IRS in its mission to provide the best services possible to taxpayers. They have been severely understaffed and backlogged for an extended period, so this progression of funding will allow the IRS to recover and adapt to the evolving needs of the United States and its taxpayers.
As a distinguished tax controversy law firm, we understand the implications this new funding could have on the IRS and taxpayers alike. Our team of tax attorneys, dual licensed attorney-CPAs, and other tax professionals will continue to affirm our clients’ rights as we examine the effects of the additional funds provided to the IRS. We expect continued updates of what the IRS achieves with its new funds in accordance with the Inflation Reduction Act, and we will keep you informed of all changes and developments made as they relate to tax controversy and tax law.
If you are being audited by the IRS and need experienced legal counsel, call our team at Rosefelt Tax Law today for a free confidential case review by dialing (866) 995-0061.
Authors: Daniel S. Rosefelt, Raeshel Kelly