The IRS/Federal Taxes and Tax Evasion, State Income Tax

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The IRS is proving what government can do when it’s actually adequately funded

It’s pretty remarkable, what happens when government is adequately funded. The Internal Revenue Service is proving it, already putting its new funding to use to making this a normal, relatively painless tax season. Just last fall, it got nearly $80 billion to spend over the next 10 years in the Inflation Reduction Act and it turned it around fast, thanks entirely to congressional Democrats and President Joe Biden. That’s the funding, by the way, that Barely Speaker Kevin McCarthy and his band of maniacs tried to repeal in their first big policy bill—the bill that would have cost the nation $114 billion over the next decade.

https://www.dailykos.com/stories/2023/3/3/2156053/-The-IRS-is-working-Really-well-Take-that-House-GOP?

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Calling the IRS? Hold times are way down this tax season

WASHINGTON (AP) — Taxpayers who called the IRS had an average wait time of four minutes this tax season compared to 27 minutes a year earlier, the agency said Monday.

https://apnews.com/article/filing-season-irs-tax-day-taxpayer-4ad340b6dc83b4b4dce89658eda7bbd1

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The IRS Tiptoes Into Offering Free Online Tax Filing — and Possible Competition With TurboTax

In the wake of ProPublica’s reporting on the misleading tactics of the major tax-prep companies, Congress asked the IRS to examine whether it could offer free filing directly with the tax agency. A new pilot program will test the concept.

https://www.propublica.org/article/irs-income-taxes-free-file-turbotax-intuit?

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2023 was one of the smoothest tax seasons in recent years. Why? Because, thanks to investments in the IRS, the agency is finally improving call wait times and reducing its backlog in processing paper tax returns.

What was Congress’ response? House Republicans voted to gut funding for the IRS and even introduced a bill to abolish the agency entirely. But they’re not done.

House Republicans now want to cut IRS funding by over $1 billion in this years’ budget, plus an additional two-year $20 billion cut Kevin McCarthy demanded in debt ceiling negotiations, which will limit the IRS’s capacity to go after wealthy and corporate tax cheats. This is part of a long term plan to weaken the IRS and make it easier for the richest 1% to dodge taxes.

Because tax returns for the wealthy and corporations are so complex, it takes agents months -- and even years -- to audit them. But, due to disinvestments in the IRS between 2010 and 2017, audit rates on millionaires and corporations had previously dropped by 71% and 54% respectively.^1,2 Instead of cuts to the IRS, we’re demanding Congress invest in the agency to crack down on rich tax cheats.

When Congress invests in the IRS, it allows the agency to audit wealthy tax dodgers, with the recovered income far exceeding the cost of the audit by more than 2 to 1.³

Think of what we could fund with those extra tax dollars. Nutrition programs, housing assistance, early education, services for people with disabilities, the aging, and so much more.

The Senate Appropriations Committee is taking up their IRS funding bill next week. They must hear from us about why investing funding in the IRS is so important. Not only will cracking down on tax cheats leave us with billions of dollars to invest in our communities, it will also continue to make tax season smoother for law-abiding people who pay their fair share.

Meredith Dodson
Senior Director of Public Policy, Coalition on Human Needs

¹ Congress Needs to Take Two Steps to Fund the IRS for the Short and Long Term
² Wyden Hearing Statement on House Republican IRS Funding Cuts Undermining Law Enforcement and Taxpayer Service
³ How much did Congress lose by defunding the IRS? Way more than we thought.

The wealthy and large corporations exploit tax loopholes and dodge taxes to avoid paying $1 trillion in taxes each year, according to Charles Rettig, the former commissioner of the Internal Revenue Service.¹ And it seems that Speaker Kevin McCarthy and members of the House of Representatives are just fine with that.

In their first order of business this session, House Republicans voted to rescind $72 billion of the $80 billion of investments the agency received as part of the Inflation Reduction Act. When their plan was DOA in the Senate, Speaker McCarthy demanded a two-year $20 billion cut in IRS funding in the debt ceiling agreement. And now, in addition, the House Appropriations Committee has put forward a plan that cuts more than $1 billion in IRS funding from the previous year’s budget.

Cutting IRS funding by $1 billion -- or 9% -- from last year would undermine the IRS’ capacity to collect taxes already owed from those with high incomes, along with limiting the IRS’s ability to serve everyday taxpayers, who have faced egregiously long hold times for phone calls and a significantly longer time processing and paying out tax refunds.

We cannot continue to allow a small, wealthy minority to get out of paying their fair share in taxes when most of us pay taxes with every paycheck.

Deborah Weinstein
Executive Director, Coalition on Human Needs

¹Tax cheats cost the U.S. $1 trillion per year, I.R.S. chief says.

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3 tax prep firms shared ‘extraordinarily sensitive’ data about taxpayers with Meta, lawmakers say

WASHINGTON (AP) — Three large tax preparation firms sent “extraordinarily sensitive” information on tens of millions of taxpayers to Facebook parent company Meta over the course of at least two years, a group of congressional Democrats reported on Wednesday.

https://apnews.com/article/irs-taxpayer-tax-preparation-meta-congress-9315cfca7a0942ab89f765d183fbf822?

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IRS is ending unannounced visits to taxpayers to protect worker safety and combat scammers

WASHINGTON (AP) — The Internal Revenue Service said Monday it is ending its decades-old policy of making unannounced home and business visits, in an effort to help keep its workers safe and to combat scammers who pose as IRS agents.

https://apnews.com/article/irs-tax-scams-revenue-service-treasury-8d4129b20366eedb828abd80c404834d?

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IRS unveils ‘paperless processing initiative’ for taxpayers. Here’s what to expect

The IRS expects to eliminate up to 200 million pieces of paper every year, slash processing times by half and speed up refunds by several weeks, the U.S. Department of the Treasury announced on Wednesday.

https://www.cnbc.com/2023/08/02/irs-unveils-paperless-processing-initiative-for-taxpayers.html?

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The IRS plans to crack down on 1,600 millionaires to collect millions of dollars in back taxes

WASHINGTON (AP) — The IRS announced on Friday it is launching an effort to aggressively pursue 1,600 millionaires and 75 large business partnerships that owe hundreds of millions of dollars in past due taxes.

https://apnews.com/article/irs-millionaires-back-taxes-2624282ac20388311bd03ee76ae36f70?

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🤖 IRS uses AI to spot complex schemes

Illustration: Sarah Grillo/Axios

The IRS has begun using AI to detect sophisticated tax violations by high-income earners and large business partnerships. Why it matters: Targets for new scrutiny include hedge funds, real estate investment partnerships, publicly traded partnerships and big law firms. The IRS is prioritizing cases involving taxpayers with incomes above $1 million but tax debts of more than $250,000, Axios' Jacob Knutson reports. 1,600 taxpayers fall under this category and "owe hundreds of millions of dollars," the IRS said. Read the IRS release ...

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YOU LOVE TO SEE IT: Free Filing, Finally

Plus, researchers uncover a rare positive climate turning point, and both insider trading and pipelines come under scrutiny.

https://www.levernews.com/you-love-to-see-it-free-filing-finally/

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The TurboTax Scam

Tax prep companies claim a government-run direct-file system would be expensive — but it could cost less than the federal subsidies going to the industry.

https://www.levernews.com/the-turbotax-scam/?

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The IRS will waive $1 billion in penalties for people and firms owing back taxes for 2020 or 2021

WASHINGTON (AP) — The IRS said Tuesday it is going to waive penalty fees for people who failed to pay back taxes that total less than $100,000 per year for tax years 2020 and 2021.

https://apnews.com/article/irs-tax-taxpayer-treasury-penalty-relief-1c213045e988c4266cda4b156532be9e?

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IRS says it collected $360 million more from rich tax cheats as its funding is threatened yet again

WASHINGTON (AP) — The IRS says it has collected an additional $360 million in overdue taxes from delinquent millionaires as the agency’s leadership tries to promote the latest work it has done to modernize the agency with Inflation Reduction Act funding that Republicans are threatening to chip away.

https://apnews.com/article/irs-tax-biden-inflation-reduction-act-ceacc306233f1a41e0e41e81e89a60a5?

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Most Americans feel they pay too much in taxes, AP-NORC poll finds

NEW YORK (AP) — A majority of taxpayers feel they pay too much in taxes, with many saying that they receive a poor value in return, according to a new poll from the University of Chicago Harris School of Public Policy and The Associated Press-NORC Center for Public Affairs Research.

https://apnews.com/article/taxes-poll-high-mistrust-local-government-bad406b062041ea2d0626058cab5491b?

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Ex-IRS contractor gets five years in prison for leak of tax return information of Trump, rich people

WASHINGTON (AP) — A former contractor for the Internal Revenue Service who pleaded guilty to leaking tax information to news outlets about former President Donald Trump and thousands of the country’s wealthiest people was sentenced to five years in prison Monday.

https://apnews.com/article/tax-returns-donald-trump-leak-sentence-bfdfec5d187d85a0f5f32115e4dc93df?

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The IRS is launching a direct file pilot program for the 2024 tax season — here is how it will work

WASHINGTON (AP) — As income tax filing season officially starts on Monday, a limited number of taxpayers in 12 states will soon be eligible to join an IRS pilot program that will allow them to calculate and submit their returns to the government directly without using commercial tax preparation software.

https://apnews.com/article/income-taxes-irs-filing-season-tax-3183677b56af696bd5e005fa01388f79?

Tax season is under way. Here are some tips to navigate it.

NEW YORK (AP) — Tax season began Monday and for many people filing U.S. tax returns — especially those doing it for their first time — it can be a daunting task that’s often left to the last minute. But if you want to avoid the stress of the looming deadline, start getting organized as soon as possible.

https://apnews.com/article/tax-taxes-fd182f294c8e46f19aa53966ca3eb163?

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Expanded child tax credit could be in place quickly if passed by Congress, IRS chief says

WASHINGTON — Internal Revenue Service Commissioner Danny Werfel told lawmakers on Capitol Hill Thursday that his agency is “poised to move quickly” on a bipartisan tax bill that would temporarily expand the child tax credit and revive several corporate tax breaks.

https://floridaphoenix.com/2024/02/15/expanded-child-tax-credit-could-be-in-place-quickly-if-passed-by-congress-irs-chief-says/?

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The IRS is sending 125,000 compliance letters in campaign against wealthy tax cheats

The Internal Revenue Service is stepping up its campaign against wealthy tax cheats , dispatching letters this week in more than 125,000 cases involving high-income taxpayers who failed to file returns since 2017.

https://www.newsbreak.com/news/3352264797568-the-irs-is-sending-125000-compliance-letters-in-campaign-against-wealthy-tax-cheats?

IRS launches crackdown on 125,000 wealthy ‘non-filers’

WASHINGTON (AP) — The IRS plans to go after 125,000 high-income earners who did not file tax returns going back to 2017 — and the agency says hundreds of millions of dollars of unpaid taxes are involved in these cases.

https://apnews.com/article/irs-tax-season-audit-back-taxes-77c891313f5233366fbe4f6fb5d896e8?

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US tax season is underway. Here are some tips to navigate it Tax season is starting in the U.S., and for many people, filing tax returns can be a daunting task that’s often left until the last minute. But if you want to avoid the stress of the looming deadline, start getting organized as soon as possible. Read more.

Key questions: Where do I start: Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals, recommends gathering all your documents in one place before you start your tax return and having your documents from last year if your financial situation has drastically changed.    How do I file my taxes: You can either file your taxes online or on paper. However, there is a time difference between the two options. Paper filing can take up to six months to process, while electronic filing cuts it down to three weeks. Taxpayers have until April 15 to submit their returns from 2023.   What resources are out there: The IRS is piloting a program, called Direct File, where you can file your federal taxes online for free. This program is now available in 12 states. Aside from Direct File, the IRS offers free guided tax preparation that does the math for you. If you have a tax problem, there are clinics around the country that can help you resolve these issues.

RELATED COVERAGE ➤ IRS chief zeroes in on wealthy tax cheats in AP interview   The IRS launches Direct File, a pilot program for free online tax filing available in 12 states   IRS expects to collect hundreds of billions more in overdue and unpaid taxes thanks to new funding

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The IRS has 940,000 unclaimed tax refunds from 2020 that are about to expire. Is one of them yours?

WASHINGTON (AP) — The IRS is warning taxpayers that they may be leaving more than $1 billion on the table.

https://apnews.com/article/tax-season-irs-refund-april-15-7d448039c59df67f054806d00110ff18?

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Fewer, bigger refunds

Illustration: Annelise Capossela/Axios

Tax refunds are bigger this year, but fewer people are getting one, Axios' Kelly Tyko reports from IRS data. 💸 By the numbers: As of April 5, the average refund was $3,011, a 4.6% increase over the same time last year. That's likely because of new tax brackets, an increased standard deduction and higher limits for 401(k) plans. But there was a 3.3% drop in the total number of refunds processed — and there's no clear explanation for why fewer people would be getting refunds this year. These figures could change once last-minute returns are accounted for. 🏦 Why it matters: Nearly a third of taxpayers say they depend on tax refunds to make ends meet, according to a Credit Karma survey. Go deeper.

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Small businesses struggle as inflation remains high

Small business optimism is the lowest since 2012. High interest rates and inflation make matters worse. Yet, the IRS’s moratorium on processing a crucial tax credit continues to inflict pain on small businesses, the backbone of America’s economy. Tell the IRS to lift the moratorium now. Learn more. Past the deadline: IRS holds up tax relief for another year     The Employee Retention Credit (ERC) was created as a lifeline for businesses in 2020 and 2021. Since 2023, over one million employers continue to wait for the IRS to deliver ERC funds. Small businesses can’t afford to wait. Don’t let it be too late.

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IRS Audit of Trump Could Cost Former President More Than $100 Million

The tax agency concluded in its long-running investigation that Trump effectively claimed the same massive write-off twice on his failed Chicago tower.

https://www.propublica.org/article/trump-irs-audit-chicago-hotel-taxes?

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Private Planes and Luxury Yachts Aren’t Just Toys for the Ultrawealthy. They’re Also Huge Tax Breaks.

What’s the only thing better than having your own Gulfstream jet? Why, getting to claim millions in tax deductions for it. All you have to do is make a case you’re using it for business, which turns out to be surprisingly easy.

https://www.propublica.org/article/private-jets-yachts-wealthy-tax-deductions-irs-files?

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Ten Ways Billionaires Avoid Taxes on an Epic Scale

After a year of reporting on the tax machinations of the ultrawealthy, ProPublica spotlights the top tax-avoidance techniques that provide massive benefits to billionaires.

https://www.propublica.org/article/billionaires-tax-avoidance-techniques-irs-files?