The Tax Times: IRS Continues To Pursue Complex Arrangements To Evade Taxes

Tuesday, August 27, 2024

IRS Continues To Pursue Complex Arrangements To Evade Taxes

The IRS released IR 2024-223, 8/23/2024 which reports and highlighting significant improvements made in the second year of funding from the Inflation Reduction Act. The report showcases advancements in taxpayer service, technology upgrades, and compliance efforts. Other achievements include increased electronic filing and scanning capabilities, enhanced efforts to disrupt tax scams, and focusing on tax compliance for certain individuals and businesses.

The IRS ramped up efforts to pursue high-income, high-wealth individuals who failed to pay tax bills, collecting over $1 billion so far. A new initiative focused on high-income non-filers, targeting over 125,000 instances of unfiled returns since 2017. The IRS' Strategic Operating Plan mentioned that the increased areas of enforcement includes areas where audit coverage declined, including employment taxes.

Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented IRS from keeping pace with the increasingly complicated set of devices that aggressive taxpayers use to hide their income and evade paying their share. The IRS is now taking swift and aggressive action to close this gap.

The IRS ramped up efforts to pursue high-income, high-wealth individuals who failed to pay a tax bill. These high-end collection cases are concentrated among taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. Out of a total of 1,600 of these cases, the IRS has assigned 1,500 to revenue officers, with over $1 billion collected so far.
The IRS announced a new effort focused on high-income individuals who have failed to file federal income tax returns in more than 125,000 instances since 2017. Non-filers receive IRS
compliance letters alerting them that the IRS is aware of their missing return and encouraging them to file or contact the IRS. The new initiative involves more than 25,000 people with more than $1 million in income, and over 100,000 people with incomes between $400,000 and $1 million between tax years 2017 and 2021.
Other elements of the agency’s renewed compliance focus include:

Abusive use of partnerships. Last month, the IRS announced a new series of steps to combat abusive partnership transactions that allow aggressive taxpayers to avoid paying what they owe.
Activities involving large corporations and partnerships. These efforts include opening examinations of 76 of the largest partnerships in the U.S., representing a cross section of industries including hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms and other industries. Other activities include expanding the large corporate compliance (LCC) program.
Aircraft use. In February, the IRS announced plans to begin dozens of audits involving personal use of business aircraft. The audits are focused on aircraft usage by large corporations, large partnerships and high-income taxpayers. The IRS are examining whether the use of jets is being properly allocated between business and personal use.

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