The Daily Populous Tuesday June 18th, 2024 day edition
Authored by cnn.com and submitted by FoolRegnant

The Internal Revenue Service announced Monday its latest move to crack down on wealthy tax cheats – an ongoing effort boosted by funding received through the Democrat-backed Inflation Reduction Act.

The agency estimates the new initiative could result in the collection of $50 billion over 10 years by closing a major tax loophole used by some business partnerships to avoid paying taxes they owe.

As the November election approaches, the Biden administration is eager to show how it’s using money from the 2022 legislation – which provided the IRS with a massive, 10-year investment – to bring in more tax revenue and modernize taxpayer services.

“Thanks to resources from President Biden’s Inflation Reduction Act, Treasury and the IRS have the tools to stop longstanding abuses,” Treasury Secretary Janet Yellen said in a press release.

Republicans are at odds with Democrats over the IRS funding. They’ve criticized the additional money as wasteful spending and have made several efforts to chip away at the agency’s budget.

The IRS initiative unveiled Monday, which consists of several pieces of regulatory guidance, targets abuse of what’s known as “basis shifting transactions.”

Sometimes, complex business partnerships move money from one property to another in order to maximize tax deductions and minimize their tax liability.

The IRS, in current and future audits, will be on the lookout for these kinds of transactions that have no substantial business purpose other than to reap a tax benefit.

“In the audits we’re doing today, we are seeing systemic use of basis shifting where there is no economic substance to the transaction. That is not allowed,” said IRS Commissioner Danny Werfel on a call with reporters Friday.

“That allows them to inappropriately avoid taxes they owe, and this guidance today is intended to end that practice,” he added.

In recent decades, more American businesses have shifted away from organizing as a C corporation – which is subject to the corporate tax rate – and toward organizing as partnerships. A recent report from the Government Accountability Office said that the IRS should improve its efforts to audit the growing number of large, complex partnerships.

Last month, the IRS detailed its plans to significantly ramp up audit rates of wealthy taxpayers and large corporations.

Due to years of underfunding, IRS audit rates of multimillionaires and large corporations fell between 2010 and 2021. Overall staffing in the agency’s compliance offices declined 30% during that time.

To ramp up audits, the IRS is hiring the accountants, engineers, economists, data scientists, attorneys and tax experts needed to conduct complex audits.

Werfel has repeatedly said the agency is committed to shielding American households that earn less than $400,000 a year from an increase in audit rates. Specifically, audit rates of those Americans will not exceed what they were in 2018, a record-low year.

The IRS is also using the funds from the Inflation Reduction Act to improve taxpayer services. As a result, the agency was able to answer 1 million more calls this year than it did during the previous tax season.

Earlier this year, the IRS launched a pilot version of its own tax filing service that allowed Americans to file their returns for free directly with the IRS. More than 140,000 people used the program, known as Direct File, to successfully file their tax returns this year.

The agency has said it will continue and expand its free tax filing program in 2025.

Basic_Bandicoot_1300 on June 17th, 2024 at 16:39 UTC »

Over a decade. That’s 10 years of not trying hard enough.

Tha_Sly_Fox on June 17th, 2024 at 15:54 UTC »

Note the qualifier “could”

I’m all for going after people lying or defrauding the government on their taxes, but it’s still crazy to me that 5B is almost nothing in a country that spends 1.7 Trillion more each year than it brings in. Makes my head hurt.

Im-a-magpie on June 17th, 2024 at 15:25 UTC »

The problem isn't rich people illegally cheating on their taxes. The problem is rich people influencing tax policy such that they don't have to pay their fair share 100% legally.