The Internal Revenue Service revealed a new long-term strategic plan on how it will spend the additional $80B afforded by the Inflation Reduction Act. Key provisions of the plan have already been set into motion.
Prior to this tax season, the IRS hired 5,000 new agents for customer service jobs. Their primary function is to answer the 800 numbers.
During the pandemic 80% to 90% of calls went unanswered. This has now been cut to 17%. Wait times are also, supposedly, down to 4 minutes.
The problem is the obvious inexperience of these new agents. If you call and your question isn’t inside one of their pre-programmed FAQ responses, they have no idea how to answer.
This is adding to the level of misinformation many customers have on their tax situations. Just because you call the IRS and get an answer, doesn’t mean that the answer you receive is correct.
It’s still generally better to write the Service, than to call. At that point, you have a fighting chance of reaching someone who has some sort of a clue.
The actual allocation of the $80B in additional funding includes…
1 – Enforcement $45.64B
2 – Operations Support $25.33B
3 – Business Systems Modernization $4.75B
4 – Taxpayer Services $3.178
The plan discusses hiring 30K new people. Given the allocation, the majority of the new hires will obviously be in audit support. The actual IRS document outlining the plan can be found at the following web address.
https://www.irs.gov/about-irs/irs-inflation-reduction-act-strategic-operating-plan
Let me leave you with this.
The March Jobs Report came out this morning and unemployment dropped to 3.5%. It was at 3.6% last month. The labor markets remain solid after the Fed aggressively increased interest rates in an attempt to tame inflation.
The labor force grew in March which took pressure off of wage growth. The average increase in wages was 4.2% as measured from a year earlier.
Services like hospitality, the professions, and healthcare are offsetting job losses in technology. Larger companies like Zoom, Goldman Sachs, and Walt Disney are all in the middle of major layoffs.
The overall economy seems to be in a sort of no man’s land. It sits at a precipice not deciding whether to go up or down.
But no matter what happens, we all must be ready.
Whether we have a soft landing or go into a full-blown recession, the Fed must slow things down. It doesn’t have a choice. It can’t allow inflation to run out of control.
Either way, conservatism must be the order of the day. Being aggressive is much too risky at this juncture.
Stockpile cash. Trim the fat. Watch your inventory. Hedge your investments.
Be ready. No one likes being in a no man’s land less than me. We all know that something’s coming and must plan for any eventuality.
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 Employee Retention Credits, M&A Due Diligence, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
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