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The audit rate of those earning between $5 million - $10 million a year is currently only 1.4%. The audit rate of the top 1% of earners is 1.5%. Those numbers are DOWN by 80%. I have no problem with getting the audit rate back to where it used to be. The money recovered in those audits will more than cover the cost of the additional agents. The cost of the additional agents is $80 Billion. The amount of money owed to the IRS is about $307 Billion total, with the top 1% accounting for more than half at $163 Billion. Please explain why you don't want to spend $80 Billion to get $200 - $300 Billion back. Do you just think the government doesn't really need that $200 - $300 Billion?
I feel like if they do this and they don't find anything they should be required to pay you a reasonable amount for your time. You did what you were required to do and they wanted more.
"They" is "you." They would take money from your left pocket and pay you back into your right pocket, subtracting money for administration.
A friend of mine, a few decades ago, was Commissioner for the IRS Large Business division, reporting directly to the overall IRS Commissioner. Previously, he was VP of Tax at a F100 company. He tells the story of first arriving at his office to discover his secretary was way on the other side of the floor from his office. Naturally, he wanted her moved to be close to his office. To do so, that meant someone else had to move to a different space -- and that someone else didn't want to move. That someone else knew every trick in the book and every vehicle for appeal to delay her own move, thereby thwarting the Large Business Commissioner from getting his desire for his secretary to be right next to his office. This went on for years.
Eventually, my friend left the IRS and is now a partner at Mayer Brown.
The question will be, can you prove, on a transactional basis, that you have a deductible expense 6 years ago Mr. Jones.
That's trivial. It is called record keeping. At the time you prepare your return, you have your receipt/record (otherwise, you couldn't take that deduction in the first place). You keep a printout of return together with all supporting documents in a Banker's Box in a closet or your garage. On a rolling basis, you shred the return & supporting documents that are 7 years old.
While agree a business needs ability to deduct valid expenses, US tax code has far too many and a bit of pruning wouldn't hurt.
Put a cap on some business expenses as they did while back with "entertainment". That lead to cutting back of "three martini lunches", but otherwise....
Other business expense deductions such as one for displaying works of art really aren't necessary.
You're taking the topic from enforcement - a matter of strategy, tactics & execution -- into the world of policy i.e., what ought to be taxed.
That is a quagmire, of course. I argue there is no reason to tax businesses in the first place. Just tax people to raise the required dollar amount of tax revenue. Businesses, being untaxed, wouldn't need armies of tax accountants & tax attorneys - they could focus on value-add. Business profits would increase, of course, and ultimately shows up in the balance sheets & income statements of business owners, customers, and employees -- all of whom are people. Just tax the people.
Congress wouldn't like that approach, of course, as tax treatment is one of their "products" that they sell in exchange for "campaign contributions." The LAST thing Congress would want is for campaign contributions to dry up.
The audit rate of those earning between $5 million - $10 million a year is currently only 1.4%. The audit rate of the top 1% of earners is 1.5%. Those numbers are DOWN by 80%. I have no problem with getting the audit rate back to where it used to be. The money recovered in those audits will more than cover the cost of the additional agents.
The bold above is highly suspect. But that isn't the point in the first place. It is only via enforcement that the other 95% of people who are NOT audited - high earners or not - follow the law. If there is no enforcement, it would be a bit like the border with Mexico.
Tax laws are the most carefully crafted documents we have. There are no loopholes, what's omitted is omitted for a reason. What's included ... likewise.
If the expected tax windfall is greater than the cost of the agents, why not? It isn't like hiring new police where you expect it to almost all on the red side of the ledger.
I don't buy into the persecution complex political angle much, most of those new IRS agents would probably be working for the next administration anyway.
Well then, you must be oblivious to the fact they have already targeted moderates and conservatives during the Obama/Biden administration, while leaving leftist groups alone.
Also why on earth would you need to not only make it the largest department by far, but also arm them?
The bold above is highly suspect. But that isn't the point in the first place. It is only via enforcement that the other 95% of people who are NOT audited - high earners or not - follow the law. If there is no enforcement, it would be a bit like the border with Mexico.
I would almost guarantee they "find" enough to cover the cost and probably for a few years after it get a little extra. Of course it would end up in political football about who was getting audited and who wasn't.
Anyways these jobs they are wanting to fill aren't even going to be fully filled anyways. People make that mistake believing the money is already spent. The IRS has had no shortage of openings over the years, they don't pay enough as it is to get people for their positions. Accounting and government are two of the areas facing the greatest difficulties filling jobs because of looming retirements and are already struggling with a lot of early retirees post-pandemic. I'd say the IRS will be lucky to keep staff at its current levels over the next five years.
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