The Internal Revenue Service announced a new initiative last September where they targeted 1,600 Millionaires who owed the Service more than $250K in established back tax debts. So far, the IRS has collected more than $1B on these cases.
The initiative involved dozens of Revenue Officers who were assigned to the individual cases in multiple jurisdictions. The success of the operation is being touted as a reason to extend the additional funding provided by the Inflation Reduction Act of 2022.
That bill provided an additional $80B in IRS funding for the following 10 years. This unpopular measure turned into a political football as GOP Lawmakers either reduced or eliminated the additional proceeds afforded by the measure in Fiscal 2024 and 2025.
But the success of the collection initiative is being touted by the Service and the Treasury Department as a means to not only get the restricted funds back, but to further increase their funding. They’ve forecasted that if the original funding was put back into place, an additional $851B would be collected through Fiscal 2034.
This process of collecting already established liabilities should not be confused by their change in audit selection criterion. As written in previous columns, the Treasury Department sent out another initiative three years ago directing the IRS to audit 8% of all returns filed annually in excess of $10M.
The audit occurrence rate on these returns went from 0.7% in 2019 to 7.2% in 2011, forcing the Service to select returns that didn’t have irregularities just to beef up their numbers and get to the new quota. As a result, the amount of money collected per hour of audit work plummeted by 93%
This initiative has since been abandoned.. We’ll see whether or not the Service’s recent success in collection will make any sort of difference in the current 2025 budget negotiations.
Let me leave you with this…
The Consumer Price Index was published yesterday and brought a couple of surprises. Most economists had expected the CPI numbers to increase by 3.1%
They instead came in lower than expected at 3%.
It looks as if our days of higher interest rates may be coming to an end. Most are predicting that the Fed will begin lowering its Fed Funds rate at their September meeting.
This is great news for all. Hopefully, this mid-range nightmare is near an end.
But as entrepreneurs we must be ever-mindful of inflation. There are still pressures increasing prices.
As such, we still need to watch our numbers to protect our bottom lines. Your monthly financial statements are still incredibly important.
We may be near the end of this, but we aren’t out of the woods quite yet.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
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Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
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