The IRS just unveiled their plans for the next decade in its 150-page Strategic Operating Plan. This document goes into detail what the IRS plans to do with the fund they receive last year from President Biden’s Inflation Reduction Act. One of the main things outlined in this document were the increased audits the IRS plans to do on wealthy Americans. This would be in line with the plan set out by the Biden Administration when the Inflation Reduction Act was first signed. In this article, we will go over a summary of the IRS’ plan and focus on what these audits mean for the future of taxes in America.
What is in the plan?
The IRS created a rather detailed plan in which they outlined each of the areas they intend to use their funding from the Inflation Reduction Act. These areas can mainly be categorized into the following: Strengthening customer service, fairly taxing high-income taxpayers, and updating outdated IRS systems.
The first area the IRS outlines as the focus of their plans is strengthening their customer service. Currently, the IRS has a reputation of never being reachable. In 2022 alone, the IRS only answered 2/10 calls on average and had a wait time of 22 minutes. While this is often something we joke about, the IRS seems to take this rather seriously and wishes to improve upon their customer service. One of the main ways they would do this is by hiring more employees who can answer phone calls, provide more online tools, and increase staffing at in-person locations. The IRS hopes to hire 30,000 new employees by the end of the year.
Auditing high-income taxpayers
The second thing outlined in the Strategic Operating Plan is the goal of doing more audits on high-income taxpayers. The IRS plans to do audits going as far back as a decade on the wealthiest Americans who may have not been paying what they should have in their taxes.
Updating Outdated Systems
The last main thing outlined in the IRS’s plan is to update their outdated systems. By doing so, they will be able to ensure the highest level of security in order to protect taxpayer’s data. This will also help them provide taxpayers with more online tools to assist them with their tax returns. A large majority of taxpayers are eligible for IRS e-file, however, this often takes the taxpayer to an outside source such as TurboTax. The goal would be to create a service entirely on the IRS website that is owned and operated by the IRS themselves.
What is an IRS audit?
We mentioned before that the IRS plans to increase audits with wealthy taxpayers, but what exactly is an IRS audit? An audit can be defined as “an official inspection of an individual’s or organization’s accounts, typically by an independent body,” so in the context of taxes, it can be understood that an IRS audit is performed to ensure that an individual or organization is paying what they should be in taxes.
Why audit the wealthy?
We now understand what an IRS audit is, but why is it so necessary to audit the wealthy? How exactly does it affect the average American? As we know, paying taxes is something you can’t avoid as a U.S. citizen. Taxes are important for the good of society and helps various government programs and operations run. Therefore, it is important that those who are earning the most in society pay a fair amount in taxes.
It can certainly be argued whether or not the wealthy should pay more in taxes or not, but they should certainly be paying the percentage they are required to by law. There have unfortunately been many cases where the wealthiest Americans have avoided paying their share in taxes. This is why it’s important that the IRS be able to audit them, to ensure they are doing their part in society the same way everyone else does.