Senate Finance Committee Chairman Ron Wyden recently shared his expectations for the recently allocated funds from the Inflation Reduction Act.
In a letter to Department of the Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig, Chairman Wyden identified, in addition to not increasing the audit rates compared to historic levels for those making less than $400,000, the $80 billion being allocated over the next 10 years should be used for the following:
- Improving customer service
- Investing in technology to improve service and enforcement
- Rebalancing of audit rates
- Cracking down on offshore tax evasion
- Reducing the tax gap
- Rebuilding the IRS Criminal Investigation Division
As part of the requirements, Chairman Wyden committed to continuing “to work on getting ‘direct hire’ authority for the IRS so it can hire agents more quickly” to address balancing audit rates and allow for the IRS to target more high earners who likely have more complex tax returns.
He also noted that the IRS has, due to “persistent” budget cuts, “conducted virtually no oversight of hundreds of thousands of shell companies in offshore tax havens that it has approved as financial institutions” under the Foreign Account Tax Compliance Act. He said this “shell bank” loophole “significantly increases the risk that wealthy taxpayers underreport offshore income.”
“I expect IRS funding to be used to monitor whether offshore entities are properly reporting accounts belonging to U.S. persons, and to take enforcement action against foreign banks and other intermediaries who help conceal income,” the letter stated.
Overall, Chairman Wyden hopes the funding will help significantly reduce an estimated tax gap of $600 billion annually.