Stay informed on the latest tax news and developments, including legislation and rule changes, for effective tax planning and compliance.
Recently, the IRS received $80 billion to expand. large objective? pursuing wealthy tax evaders
The House recently passed a climate and healthcare bill that includes an $80 billion investment in the Internal Revenue Service (IRS) over the next decade. This funding is intended to modernize outdated computer systems, improve customer service (such as the taxpayer phone line), and enhance enforcement to collect a portion of the estimated $600 billion in unpaid taxes each year, primarily owed by wealthy individuals.
Treasury Department counselor Natasha Sarin says that by strengthening the IRS's capacity to target wealthy tax evaders, the agency could collect at least $400 billion over ten years. However, Republicans argue that the additional enforcement will target middle-class taxpayers instead. Both Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig insist that the focus will be on the wealthy.
This funding comes after over a decade of under-funding at the IRS, which has seen its enforcement ranks decrease by 30% since 2010. This under-funding has led to simpler audits focusing on lower-income families, who account for a small share of unpaid taxes. The additional resources are expected to level the playing field and create a fairer tax system by targeting tax evasion at higher income levels.
Stepped-up enforcement is expected to not only increase revenue collection but also contribute to a more equitable tax system. The goal is to end the two-tiered tax system, where certain taxpayers can evade taxes while the majority of taxpayers remain compliant with their obligations.
To claim $1.5 billion in tax refunds from 2019, the IRS says you still have time
The IRS urges nearly 1.5 million people with unclaimed 2019 tax refunds to file before the July 17 deadline. Worth almost $1.5 billion, the median payment is $893. Due to the Covid-19 pandemic, the typical three-year deadline to claim refunds has been extended. Many Americans, including students and part-time workers, may have accidentally skipped filing. Experts suggest starting by gathering documents and accessing IRS transcripts for the required information. Filing 2019 taxes can make it easier to handle unfiled returns for other years.
The shrinking size of tax refunds fits the trend of a slowing economy
Consumers have been driving the economy with increased cash and spending from higher wages, savings, and pandemic stimulus. However, as pandemic-related benefits wane, larger tax refunds are now decreasing. Walmart's CFO, John David Rainey, discussed the impact of expired Covid-era SNAP food program benefits and lower average tax refunds on the retail sector. IRS data reveals a 10.4% decline in average tax refunds year-over-year. Experts are cautioning that consumers may slow down as pandemic-era benefits and tax credits fade. Inflation and smaller refunds could further impact consumer spending, particularly for low- and moderate-income households. The decline in tax refunds may contribute to the deceleration of retail sales and influence overall consumer spending behavior in the coming months.
