The 80 Billion Dollar 2022 Inflation Reduction Act Fact vs. Fiction

As you probably know by now, Congress has authorized $80 billion for the IRS as part of the 2022 Inflation Reduction Act. $45.6 billion of the $80 billion is earmarked strictly for enforcement. The IRS is using most of this money to hire 87,000 new personnel, and to modernize their 1960’s era computer systems so that they can quickly and more easily garnish paychecks, levy bank accounts and file federal tax liens against your clients.

I recently saw an article that stated the IRS is hiring 5,000 new automated collection system operators, ACS agents. These are the agents you call when you have a notice of balance due and you need to negotiate an installment agreement or a partial pay installment agreement.  This is in response to the phone problem the IRS had last year, where less than 10% of the 73 million calls placed to the IRS went answered. The IRS calls these a “courtesy disconnect”. Yea, right!

Since most of the $80 billion is going to be spent in the next few years, we are going to see a gradual ramp up in many more audit and collection cases. The IRS is going to be looking at high income earners, specifically non-filers who are earning over $100,000 whether on a W-2 or Schedule C.  Additionally, Schedule C filers are five times more likely to be audited than a wage earner.  That is why I generally recommend, if the tax advantages are there, to form an entity like a subchapter S or C Corporation or an LLC because those entities do not get looked at as much, although that’s probably going to change with all this additional IRS funding.

Even though the floodgates are not going to open tomorrow and the IRS is not automatically going to have all 87,000 new revenue officers and new revenue agents hired at once, the signs are there that the floodgates will be open soon. There is a sense of urgency to spend this new funding in the earlier years even though it is supposed to be spread out over ten years, because the current administration is afraid of a new administration coming into power and reversing course.

What this means for you is that now is the time to get your name out there. Now is the time to be known.  Now is the time to be online so that when the floodgates open prospects can find and hire you. Therefore, it’s important to start or ramp up your marketing now so when people do a search in your local area, your name comes up and you get the business.  We are going to see an influx of new tax resolution cases like we have never seen before.  I have been in this business a long time. The last time the stars aligned like this (major IRS funding and a recession) was back in 2009-2011, during the Great Recession. I had my most profitable years during that time.  We’re going to see IRS staffing levels that we haven’t seen since 2010.

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