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Corpus Christi IRS audit representationRecently, President Joe Biden unveiled a proposal for an increased budget for the Internal Revenue Service (IRS). This proposal would increase the agency’s funding by $80 billion over the next 10 years, allowing the IRS to conduct more tax audits and focus on collecting taxes owed by high-income individuals and businesses.

President Biden and the IRS are looking to reduce the “tax gap,” or the difference between what taxpayers owe and what is actually collected by the IRS. The IRS’s commissioner recently stated that the tax gap is close to $1 trillion per year. This gap is due in part to a reduction in the audits performed by the IRS over the past decade. Since 2012, the number of millionaires in the United States has doubled, but audits of these taxpayers have decreased by 72%. The IRS has also reported that the top 1% of income earners fail to report 20% of their income, resulting in an annual loss of $175 billion in tax revenues.

Who Will Be Impacted by Tax Audits?

If Congress approves Biden’s proposal and increases the IRS’s budget, the agency will have more resources to focus on collecting taxes owed by wealthy individuals and high-earning businesses. Technological improvements will provide the IRS with better access to financial information, allowing it to identify offenders who use complex schemes to avoid paying taxes.

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