Biden Plans To Build An Army Of IRS Agents, Send It After Large Corporations And The Wealthy

Now would be an excellent time for anyone concerned about tax liability to get their house in order.

I don’t know much about tax law, but I have looked at a lot of different tax returns over the years. Tax forms are a good way to prove a litigant’s income, among other things. Anyone like me who has looked at a lot of people’s tax returns and who is willing to be honest about it will tell you the same thing: there is a lot of income tax cheating going on in the world.

It is somewhat difficult for a W-2 wage earner to cheat on his or her taxes. Wage earners get a salary or hourly pay, their employer reports it and probably even withholds the taxes, not much of a fuss. But business owners and anyone else with a complicated income stream are a different story. It is so easy to get on the slippery slope for those with complicated tax pictures. Perhaps it starts as stretching definitions a little bit to deduct just a few more expenses. Then, when no one seems to notice or care, human nature is to gradually push the boundaries.

For a long time now, no one has seemed to notice or care, at the federal level at least. Tax enforcement under the Trump administration was an underfunded joke, which is not that surprising, since Donald Trump himself seems to have benefited from tax fraud which went overlooked for years. Trump has not been charged with a tax crime (yet). Still, even if he isn’t ultimately charged with a crime, making Trump responsible for tax enforcement is pretty much what the idiom “putting the fox in charge of the henhouse” was made for.

President Joe Biden is proposing a radically different approach. A recent Treasury Department report indicated that Biden intends to gradually increase IRS funding by $80 billion, with the agency’s budget set to grow by about 10 percent annually. Some of that funding is set aside for new hires, and the plan is to increase the IRS workforce by 87,000 over the next decade. If 87,000 new IRS workers are indeed brought on, that would mean the agency would approximately double in size.

Growing the IRS is part of the Biden administration’s efforts to focus specifically on what it calls “high-end evasion.” In simple terms, the IRS is going after uncollected taxes owed by large businesses and wealthy individuals. Audit rates will not go up for those earning less than $400,000 per year, according to the Treasury Department. In contrast, under the Trump administration, lower earners were more likely to be audited than all but the very wealthiest taxpayers, especially those with annual incomes under $25,000 who received the earned-income tax credit.

In addition to IRS staffing and budget increases, the Biden administration intends to implement new reporting requirements for financial institutions and other types of businesses that handle customer accounts. According to official figures, the proposal to focus more on uncollected taxes owed by the wealthy and corporations will generate $700 billion in tax revenue over a decade.

No one really knows how much high-end tax evaders are hiding. According to the IRS, in 2019 the amount of taxes that went uncollected was about $554 billion. However, IRS Commissioner Chuck Rettig recently said that the real figure could be as much as $1 trillion per year. A trillion dollars would sure build a lot of roads, schools, and bridges.

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Under the Biden plan for the IRS, high earners and large corporations are likely going to face increased scrutiny. Now would be an excellent time for anyone concerned about tax liability to get their house in order. Of course, if you’re worried about an audit, the best defense is just to pay all your taxes.


Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

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