The IRS anticipates retrieving a substantial increase in delinquent and outstanding tax revenue.

MoneyWatch: February 6, 2024 / 4:56 PM EST / CBS/AP

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The IRS is expecting to collect hundreds of billions of dollars in additional tax revenue thanks to funding from the Inflation Reduction Act (IRA), according to a new analysis released by the Treasury Department and the IRS on Tuesday. This estimate far surpasses previous expectations and is projected to increase tax revenues by up to $561 billion from 2024 to 2034.

The IRA, which became law in August 2022, has provided the IRS with the resources to step up enforcement and go after overdue and unpaid taxes. This comes as some Republican lawmakers have pushed to cut IRS funding, citing concerns about increased audits for middle-class Americans. However, IRS and Treasury officials have stated that their focus is on targeting wealthy tax cheats and businesses with outstanding tax bills.

National Economic Adviser Lael Brainard stated, “This analysis demonstrates that President Biden’s investment in rebuilding the IRS will reduce the deficit by hundreds of billions of dollars by making the wealthy and big corporations pay the taxes they owe.”

In 2022, the Congressional Budget Office estimated that the new IRS funding provided by the IRA would increase revenues by $180.4 billion from 2022 to 2031. However, the IRS now believes that with restored, renewed, and diversified IRA funding, revenues could reach as high as $851 billion from 2024 to 2034.

The Biden administration is using this report to promote the President’s economic agenda as he campaigns for reelection, while the IRS continues to face threats to its funding. Brainard added, “Congressional Republicans’ efforts to cut IRS funding show that they prioritize letting the wealthiest Americans and big corporations evade their taxes over cutting the deficit.”

The IRA provided the IRS with an $80 billion infusion of funds, but House Republicans included a $1.4 billion reduction to the IRS in the debt ceiling and budget cuts package passed by Congress last summer. An additional agreement diverted an extra $20 billion from the IRS over the next two years to other non-defense programs.

In response, the agency has been working to demonstrate how it is utilizing the remaining funds in hopes of preventing further cuts. New customer service improvements were implemented at the start of tax season on January 29th, and earlier this month, the IRS announced that it had collected half a billion dollars in back taxes from wealthy tax cheats.

One of the biggest challenges for the tax collection agency is ensuring that individuals and businesses pay their taxes. The audit rate for millionaires has decreased by over 70% from 2010 to 2019, and the audit rate for large corporations has decreased by over 50%, according to Treasury’s Deputy Assistant Secretary for Tax Analysis Greg Leiserson.

In conclusion, the IRS is expecting to collect a significant amount of additional tax revenue thanks to the IRA funding, and the agency is working to address its challenges in tax collection. However, threats to its funding continue to be a concern, and the Biden administration is using this report to advocate for the President’s economic agenda.  

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