U.S. Government Could Lose Billions Due to Fewer Audits
Taxpayers rejoice! There may actually be some good news about tax returns this year. The US Government could lose billions due to fewer audits. That’s because according to reports, due to reduced staff, the IRS may be forced to reduce the number of audits it would ideally like to perform. The government losing billions of dollars is never good. But fewer audits for you and me might me. Congress is tasked with making tax laws and code so the country has enough money to operate properly. The IRS is tasked with enforcing those codes and laws. It has been referred to the largest collection agency in the world.
If all taxpayers simply paid their exact tax obligations on time, there would be no need for audits. Unfortunately, the tax code can be so complex, paying the correct amount can be difficult if not impossible to compute, and some citizens flat out lie to avoid their tax obligations no matter how small, or big. Hence the need for a collection agency like the IRS. The difference between what is actually owed and what is collected is referred to as the tax gap, and efforts are underway to reduce it.
Here are a few points of interests.
Less Revenue (government could lose billions)
The IRS will likely decrease the number of audits it performs on high-wealth individuals, businesses and partnerships, a particularly deep well from which to extract money. According to the IRS, their employees tend to get poached by accounting firms, especially the more seasoned staff that can be assigned to the more complex return audits.
Unfortunately, these IRS employees trend to be the most favored targets to acquire. It is not possible to simply assign less experienced auditors to the more complex audits because they do not have enough experience to be successful. Success is important, as leaving money on the table directly results in lost revenue for the country. Everyone paying the correct amount of taxes on time is important and needed for the government to run smoothly and within budget. Not all audits result in additional revenue, but it is not uncommon for individuals to simply pay more than rightfully owe, just to avoid the audit process, which can require a lot of time and resources.
Fewer Audits But Not Budget Cuts
Despite several budget cuts in recent years; not so much in 2021, in large part due to the pandemic. In the past, the IRS has noted that it does not intend to use debt collectors from the private sector to help enforce collections. That’s because this method proved to be unsuccessful when they tried it in 2006. But the government still needs money to run, and some individuals still try to get away with not paying everything they owe, so the IRS will continue needing and using audits as a way to generate revenue.
GROCO Is Ready to Help
Although there may be fewer audits in store for taxpayers this year, that doesn’t mean everyone will escape the IRS’s audit division. If you want to learn more about preventing an audit please talk to your GROCO representative. Especially if you have been chosen for an audit and you need help getting through the process. If you have any other questions or concerns regarding your taxes then just give GROCO a call at 1-877-CPA-2006 or come in and see us if you happen to be in the San Francisco Bay Area.
We hope you found this article about the US Government could lose billions due to fewer audits helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
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