The 2022 discretionary funding request (request) made by the Biden Administration will invest in a “fair and robust” tax system that includes tax compliance enforcement directed at High Income and High Net Worth Individuals and Corporations. The funding program request states that the tax reforms are targeted to ensure that “the wealthy and well-connected pay what they owe and play by the same rules as everybody else”.
According to the request, this is what can be expected:
- Increased Enforcement: Additional funding translates into IRS hiring surges that will increase enforcement activity and bring in additional revenues. Additional hiring allows the IRS to increase focus on Campaigns and Programs that are in place to address non-compliance.
- Audits: The risk for High Income and High Net Worth Individuals and Corporations taxpayer audits increases with additional IRS funding.
- Prioritization of foreign assets and income: IRS will continue to prioritize abuses in offshore schemes as well as foreign non-reported income.
IRS Campaigns and Programs that are currently in place are strong Tools that address Taxpayer Non-Compliance:
- Global High Wealth Program which covers audits of entities (domestic and foreign partnerships, corporations, trusts, and similar structures) controlled by individuals will be expanded.
- High Income Non-Filer Campaign will concentrate on bringing into compliance those taxpayers who have not filed tax returns.
- Offshore Private Banking Campaign addresses tax noncompliance related to taxpayers’ failure to report income generated and information reporting associated with offshore banking accounts. Treatment streams under this campaign will also address individual FATCA compliance. FATCA records, including those received under intergovernmental agreements (IGAs), will be reconciled with U.S. domestic reporting.
- FATCA Filing Accuracy campaign addresses those entities that have FATCA reporting obligations but do not meet all their compliance responsibilities. The IRS will address noncompliance through a variety of treatment streams, including termination of the FATCA status.
- IRS Large Business and International Division campaigns that address taxpayer noncompliance related to unreported income, undisclosed assets, or any other tax avoidance scheme.
- The Virtual Currency Compliance campaign addresses noncompliance related to the use of virtual currency through multiple treatment streams including outreach and examinations.
Non-compliant Taxpayers need to prepare now
Taxpayers ought to begin preparing for additional IRS audits and scrutiny. This entails having audit-ready files. Taxpayers that are out of compliance should also consider coming to the IRS first, before the IRS reaches out to them.
Do you have a qualified Tax Specialist that can assist you and represent you in front of the IRS? ©