The IRS has been in the news recently, and there are several rumors floating around on social media that we’d like to set straight. It’s simply NOT true that 87,000 IRS agents with guns will be coming after you any time soon!
Here are the real facts. The Inflation Reduction Act signed by the President on August 16, 2022 appropriates an additional $80 billion to the IRS for a period of 10 years, beginning October 1, 2022. The IRS Commissioner has been tasked to come up with a spending plan and has six months to present it.
Some of the money will go to improving technology at the IRS. Currently, when a paper return is filed, it can take months to process, so there will be improvements to make in that area as well as several other system improvements. Another area that needs more budget is customer service. Less than one-fifth of all phone calls in 2021 were answered, causing response delays and daily headaches for tax professionals as well as taxpayers.
$45.6 billion is reserved for civil and criminal enforcement. Overall audit rates are at .12 percent, similar to levels seen during World War II. That means your chance in 2020 of being audited was 1 out of 833 returns. In other words, very, very low.
The bulk of the hires will be in technology, customer service, and civil enforcement. Letters dated August 2022 from Commissioner Rettig and Treasury Secretary Yellen emphasize that the bulk of the enforcement will be targeted at taxpayers earning the highest income levels.
The criminal investigation section of the IRS currently employs about 2,000 agents. And yes, they do carry weapons because they tend to deal with criminals that are armed, such as drug cartel members. Even if this division doubles over the next few years, it means a few thousand hires, not 87,000 as reported on social media.
The hiring market for accountants is currently very tight. Many CPA firms are challenged to fill open positions. With additional retirements occurring over the next few years, the IRS will face the same issues with building, onboarding, and training their new staff of accounting, tax, and audit specialists. Simply, put, it could take longer than planned to make an impact that will be felt at the taxpayer level.
Most tax professionals and some taxpayers have been heavily impacted by the IRS’s poor customer service. The hope is that the additional funds will focus on providing taxpayers with faster answers and faster refunds in the future, most likely starting in 2024 and beyond. Faster answers and refunds are simply not as exciting as 87,000 agents with guns, which is likely why it didn’t make the news cycle.