Come Fly with Me! IRS Funding Boost Yields Ambitious 10-Year Plan

The Inflation Reduction Act, enacted in 2022, provided IRS with an $80 billion funding boost, since reduced by approximately $21 billion, through this year’s Fiscal Responsibility Act. Over the next decade the new law translates to about 200 projects for IRS improvements for taxpayers, tax professionals, and IRS employees. The IRS expects to dramatically improve taxpayer service as well as bolster its technology, data, and analytics. This will be accomplished partly by hiring the personnel needed to carry out enforcement work, including attorneys, accountants, and data scientists. Be ready!

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Related Content

• Inflation Reduction Act of 2022: Tax Provisions
  Reference this summary of the Inflation Reduction Act’s tax effects. Spending under the Inflation Reduction Act came from increased revenue from fixing some well-publicized inequities both within and outside the federal tax system. The most significant fixes were the introduction of the new corporate alternative minimum tax (AMT), the reform of Medicare drug purchases, and enhanced IRS enforcement.
• Energy Tax Credits and Incentives
  Review how the previously-owned clean vehicle credit was added by the Inflation Reduction Act which supplements the Clean Vehicle Credit under I.R.C. § 30D. Starting in 2024, a taxpayer can transfer the credit to the vehicle dealer if that dealer meets certain requirements. I.R.C. § 25E(f). The credit does not apply to vehicles purchased after 2032. I.R.C. § 25E(f).

Practical Guidance Updates 

Featuring the latest updates from your Practical Guidance account.    

•  Tax Key Legal Developments Tracker (Federal)—keep up to date with key legal developments!
  • Business Entities. IRS and Treasury propose regulations regarding information reporting, determining the amount realized and basis, and backup withholding, for certain digital asset sales and exchanges. Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions, 88 Fed. Reg. 59576 (Aug. 29. 2023).
  • Practice, Procedure and Controversy. IRS announces sweeping effort to restore fairness to the tax system with Inflation Reduction Act funding. New compliance efforts are focused on increasing scrutiny on high-income, partnerships, corporations, and promoters that abuse tax rules. IR-2023-166 (Sept. 8, 2023).
  • Practice, Procedure, and Controversy. IRS describes the rules it applies in determining the Federal income tax consequences of refunds of state or local taxes and certain other payments made by state or local governments to individuals, providing examples that illustrate application of these rules. Notice 2023-56.

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