In a recent announcement, the Internal Revenue Service revealed its latest efforts to target wealthy tax cheats with the help of funding from the Inflation Reduction Act. This initiative, supported by the Biden administration, aims to close a major tax loophole used by some business partnerships to avoid paying their fair share of taxes.
Treasury Secretary Janet Yellen expressed gratitude for the resources provided by President Biden’s legislation, stating, “Thanks to resources from President Biden’s Inflation Reduction Act, Treasury and the IRS have the tools to stop longstanding abuses.”
The new IRS initiative focuses on addressing “basis shifting transactions” that some business partnerships engage in to manipulate tax deductions and minimize tax liability. IRS Commissioner Danny Werfel emphasized that these transactions have no economic substance and are used solely to avoid paying taxes.
Republicans have raised concerns about the IRS funding, criticizing it as wasteful spending. However, the agency remains committed to cracking down on tax evasion and improving taxpayer services with the help of the Inflation Reduction Act.
With the upcoming November election, the Biden administration is keen to showcase how the funding is being used to bring in more tax revenue and modernize the IRS. The agency’s efforts include ramping up audit rates for wealthy taxpayers and large corporations, hiring additional staff for complex audits, and enhancing taxpayer services.
Furthermore, the IRS has launched initiatives such as the Direct File program, which allows Americans to file their tax returns for free directly with the agency. The success of this program has led to plans for its expansion in the coming years to better serve taxpayers.
