Tim’s Tax News on the Tenth – August 2022

On August 7, 2022, the Senate approved nearly $80 billion in IRS funding, with $45.6 billion for “enforcement.” This massive appropriation raises many questions about how the IRS will spend the funds and which citizens may be targeted by future IRS audits.

The Senate’s approval of nearly $80 billion to the IRS was premised upon a Congressional Budget Office projection that the investment is projected to bring in back to the government about $203.7 billion in revenue from 2022 to 2031.

To put the above in perspective a recent March 12, 2021 TIGTA Final Audit Report disclosed: Over the past five years, the IRS’s budget has increased approximately 6 percent from $10.7 billion in FY 2015 to $11.3 billion in FY 2019. Overall, the IRS ended FY 2019 with approximately 74,196 full-time equivalents, a 117 full-time equivalent decline from 74,313 in FY 2018.

The IRS collected $57.5 billion in enforcement revenue in FY 2019, less than the all-time high amount of $59.4 billion in FY 2018. The revenue collection was driven substantially by systemic processes like the notices and Automated Collection System streams. About 74 percent of FY 2019’s enforcement revenue was collected within the systemic processes.

The Automated Collection System supported the IRS’s enforcement operations by collecting approximately $3.4 million per full-time equivalent, i.e., full-time worker, of Automated Collection System employees in FY 2019, while revenue officers within Field Collection collected, on average, more than $1.8 million each.

Assuming the Senate’s legislation is approved by the House and signed into law, it will take time to phase in the funding, hire and train new workers. New auditors will likely have a six-month training program before taking on taxpayer cases. In addition, once they start they will likely receive cases worth a few hundred thousand dollars rather than tens of millions.

If you would like more details, please do not hesitate to call our office. Our office has been successful in helping taxpayers with IRS and IDOR collection problems for over 29 years. If you have a tax or debt problem, please contact me at 847-705-9698 or thughes@lavellelaw.com and find out how we can help you.

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Lavelle Law, Ltd. is registered with the Illinois Department of Financial and Professional Regulation as an approved continuing education provider for CPE for CPAs and Enrolled Agents. If your organization is seeking CPE courses in the area of Business Law, Innocent Spouse Relief, IRS Collections, Tax Scams (including ID Theft), or other areas in tax law that can be taught at your office, please contact me at thughes@lavellelaw.com.