Look Out, Taxpayers: The IRS Continues to Grow

In its current form, the IRS has managed to make life quite difficult for thousands of business owners and taxpayers across the country. If you have ever dealt with an IRS dispute, you know exactly what we mean. The IRS is often referred to as the world’s “most brutal collection agency” thanks to their aggressive tactics of debt collection.

And now, it appears likely that the agency will become even more powerful in the near future. The Washington Post reports:

The IRS would receive additional money for taxpayer services and tax law enforcement, and several financial regulatory agencies also would see funding increases to help them enforce Wall Street reforms, under a spending bill approved Tuesday by a Senate panel.

The Senate bill would provide $12.5 billion for the IRS in fiscal year 2013 which starts in October, an increase of 6 percent from the 2012 level but still 2 percent below the White House request.

“Resources provided will allow the IRS to meet an increasing demand for services and to make improvements that will permit taxpayers to access automated self-service applications including refund inquires, freeing staff to handle more complex tax law inquiries. Funds will also support an array of compliance activities to address offshore tax evasion, reduce the under-reporting tax gap, combat tax-related identity theft, strengthen return preparer compliance, and restore revenue lost as a result of past reductions to examinations and collection programs,” the bill summary says.

“The IRS’s ability to fulfill its critical mission has been threatened the last two years by a lack of resources,” said President Colleen M. Kelley of the National Treasury Employees Union, who called it counterproductive to restrict IRS funding so much that it hampers tax collection.

Of course, all of us would agree that tax fraud must not be tolerated. Unfortunately, it often seems like the IRS does not distinguish between deliberate tax fraud and innocent mistakes—and the likely result of this budget increase is more stress for taxpayers who have made innocent mistakes. If you’d like to learn more, or if you are currently engaged in a dispute with the IRS and would like help resolving the situation, please get in touch with us today!