IRS Launches Intensive Crackdown on Big Companies and Wealthy Individuals with ‘Fresh Audits’
The Internal Revenue Service (IRS) is gearing up for a comprehensive crackdown on corporations and high earners, fueled by a substantial injection of funding from Congress. This latest initiative, formally announced on Wednesday, will see the IRS conduct dozens of new audits, with a particular focus on corporate jet usage.
The agency aims to scrutinize large corporations, complex partnerships, and top earners, suspecting some entities of overstating deductions related to aircraft used for mixed business and personal travel.
In this new wave of audits, the IRS is targeting corporate jet usage, aiming to establish a clear delineation between business and personal travel. The challenges associated with record-keeping in this context have been acknowledged by IRS Commissioner Danny Werfel. He emphasizes the importance of these aircraft audits in preventing high-income groups from evading their tax responsibilities.
While the initial audits are concentrated on corporations and complex partnerships, the IRS has hinted at the possibility of extending its scrutiny to individuals based on the findings from ongoing examinations. The agency is particularly focused on increasing scrutiny of complex high-income returns, where there is a perceived high risk of non-compliance and deliberate tax evasion.
The IRS asserts that tax evasion by millionaires and billionaires significantly contributes to a staggering $150 billion annual tax gap. Commissioner Werfel highlights the need for investments to address this gap and ensure a fairer system.
The agency’s goal is to level the playing field, ensuring that both complicated filers with extensive resources for legal and accounting support and simpler filers are equally accountable for their tax obligations.
Acknowledging the complexities in the current tax system, Werfel emphasizes the need for investments to empower the IRS to determine owed taxes accurately. The IRS aims to create a fair system that transcends the financial capacities of filers, whether they are well-resourced corporations or individuals with a more straightforward financial profile.
As the IRS prepares to implement its new audit strategy, beginning with private jet owners, the landscape of tax compliance is set to undergo a significant transformation. The agency’s emphasis on tackling tax evasion among the wealthy and corporations reflects a commitment to closing the tax gap and ensuring a fair and equitable tax system for all.
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The coming months will reveal the extent of the IRS’s crackdown and its impact on the financial practices of corporations and high earners alike.