I hope you have managed to stay safe and well! We focus on resolving tax issues in Prince William County and throughout the lower Northern Virginia area.

Now that President Joe Biden has signed into law the Inflation Reduction Act bill. We practitioners are as anxious as Secretary Janet Yellen seems to be, as she has directed the Internal Revenue Service (IRS) to develop a plan within six months outlining how the tax agency will overhaul its technology, customer service and hiring processes.

The hope from supporters of the bill, is that the improvements will give the agency the ability to collect more revenue. With some believing that we currently have a “two-tiered tax system, where most Americans pay what they owe, but those at the top of the distribution often do not,” stated by Janet Yellen memo to current IRS Commissioner Chuck Rettig.

Yellen’s memo, obtained by The Associated Press, outlines the importance of modernizing IRS computer systems and ensuring the agency has an adequately-staffed workforce now that the tax collector is set to receive nearly $80 billion over the next 10 years.

That funding is needed for more than technology. At least 50,000 IRS employees are expected to retire over the next five years.

Yellen has called for the IRS to “fully resolve the inventory backlog and make significant improvements in taxpayer services,” “to overhaul an information technology system that is decades out of date” and invest and train employees “so they can identify the most complex evasion schemes by those at the top.” Current estimate is that there are over 35 million taxpayers in the IRS collection process, so it won’t be a stretch for some of the newly hired staff to “cut their teeth” in pursuing those collections cases that involve taxpayers from all walks of life.

While, instructions are being given to IRS leadership not to increase audit rates on Americans making under $400,000 a year annually, there’s certainly no guarantee that the IRS will do so (we’re currently working cases that do not involve individuals that make more than $400k a year), and the real criteria, seems to be how much they think you owe and what they can obtain as opposed to how much income a taxpayer generates.

If ever you’re feeling overburdened by your tax situation or you’d rather be doing something else with your time, just remember we’re here to help you with all of your tax preparation, resolution/representation needs.  Now and in the future. Don’t put off addressing your tax situation. Feel free to contact us with any questions you may have in approaching your specific tax scenario.