TaxWatch: IRS is creating a blueprint on how to spend $80 billion. Here are some early details on how these extra funds will change tax season.

by | Jan 23, 2023 | Stock Market

More staff to answer phones, more tax forms and more chances to upload tax forms online — but no clarity yet on a key point for an effort to audit more rich households. These are the findings — thus far — of a report by a Treasury Department watchdog. The report, released this month, looks at how the Internal Revenue Service will implement extra funding and new tax rules from a sprawling tax and climate package that Congress passed over the summer.

The Inflation Reduction Act passed in August, created and expanded clean-energy tax credits, while launching new rules on corporate taxes. The legislation also earmarked $80 billion in dedicated funding to the IRS over a decade to help the tax agency rebuild its ranks and ramp up tax compliance — funding that’s drawn the ire of many Congressional Republicans. More than half the funding, $45.6 billion, is slated to increase enforcement and the Biden administration says that’s targeting corporations and households making over $400,000. The new report from the Treasury Inspector General for Tax Administration (TIGTA) is adding details on how the IRS is faring at the “difficult and large-scale task” of putting the legislation into practice as two dates approach. There’s the Jan. 23 start of tax filing season, and a Feb. 17 Treasury Department deadline for the IRS to produce a spending and staffing plan with the extra money. The difficulties in contacting the IRS by phone has frustrated both taxpayers and tax professionals. Treasury Secretary Janet Yellen has pledged improvements in phone service this tax season. Through early November, the IRS has hired more than 4,700 new customer service representatives while nearly 800 representatives left, according to the report. That’s a net gain of nearly 3,900 …

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