Sep 22

Inflation Reduction (September-2022)

One year ago, my article started off with this.  “Fresh from the Internal Revenue Service (IRS) Small Business and Criminal Divisions.  The division has made the statement they will hire thousands of Auditors by September.  This was made available by President Biden and the House Appropriations Committee to provide an additional $1.7 billion for the fiscal year 2022 IRS budget.  Quote, “The IRS SB/SE co-commissioners De Lon Harris and Darren Guillot spoke to the conference. “We’re going to be ready to go, as soon as that budget hits... to start bringing in what could be double the number of folks that we are looking at bringing in this year, just for exam alone.” They noted that they plan to hire 1300 field revenue officers, 400 tax compliance officers who will be available for "in person audits" (formerly called "office audits"), and 518 automated collection system (ACS) phone representatives". Now, we have the Inflation Reduction Act of 2022.  In this Act, IRS is receiving an additional $80 Billion Dollars for IRS tax enforcement funding.  I just don’t understand where all the money goes and they still can’t answer the phone in a timely manner, process wet signature returns and request in a timely manner, and the list goes on.  Anyway, if this is the plan to hire and additional 87,000 new agents, it will take new auditors six-months to complete their training and they are expected to audit cases worth less than tens of millions of dollars.  Overall, between fiscal years 2015, through 2019, audits were down around 44%.  So, you can see why the want to ramp up the audits.  Currently, the IRS ranks each tax return with a numeric score.  The higher the score, the more likely an audit will be initiated.  Or possibly, the system may flag a return due to deductions or credits that fall outside of acceptable ranges.  Therefore, the best advice I can give you is to make sure you have your receipts to substantiate the amounts reported on your return.  Other items included in the act is repealing the Trump-era drug rebate rules for $120 Billion, Drug price inflation cap for $100 Billion, Negotiation of certain drug prices for $100 Billion, Clean vehicle manufacturing for $20 Billion, Clean energy technology for $30 Billion, Reducing health insurance premiums for $64 Billion, and other tax breaks not affecting the majority of the taxpayers.  Finally, many key policies were negotiated out covering plans for new childcare, housing, eldercare, and paid-leave programs.  My, my.  Oh, and for the record, the title of the act again is Inflation Reduction Act of 2022.  I didn’t find anything that addressed the inflation we are experiencing.  This was even recognized and emphasized by Bernie Sanders.  Wow!!!  What will Congress and our dear President think of next?  Mid-terms elections are coming up.  I recommend you give it some serious thought and don’t re-elect career politicians and clean up our political arena with representatives for the people and not just for the affiliated party leaders.   

This is very brief overview. For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.   Provided by Tracey C. Higginbotham, E.A., (321) 632-5726, a member of the National Society of Accountants.