Tax News Update    Email this document    Print this document  

May 4, 2021
2021-0908

President Biden proposes increased IRS budget to improve tax compliance

On April 28, 2021, the Treasury Department issued a press release detailing the government's plan to increase resources to the IRS in order to improve tax compliance.

According to the release, President Biden proposes to direct $80 billion to the IRS over the next 10 years to (1) improve technology; (2) increase the hiring and training of auditors to focus on complex investigations of large corporations, partnerships and global high-wealth individuals, and (3) increase enforcement against high-income individuals.

"The IRS requires more resources to conduct investigations into underreported income and to pursue high-income taxpayers who evade their tax liability through complex schemes," according to the release.

Treasury expects these changes to result in $700 billion in tax revenue over the next 10 years.

Treasury also said it wants the IRS to implement a mechanism for cross-checking the accuracy of tax filings from "opaque sources," such as partnerships and proprietorships. Treasury said it will leverage "the information that financial institutions already know about account holders, simply requiring that they add to their regular, annual reports information about aggregate account outflows and inflows."

Implications

While implementation of all facets of the plan will take time, corporations, high-wealth individuals and partnerships may want to prepare for the possibility of increased audits. The proposed information reporting would provide IRS with significant additional data points that will enable IRS to more accurately target potential underreporting and other noncompliance.

———————————————

Contact Information
For additional information concerning this Alert, please contact:
 
National Tax Department, International Tax and Transactions Services, Transfer Pricing
   • Ryan J. Kelly (ryan.j.kelly@ey.com)
   • Heather Gorman (heather.gorman@ey.com)
Tax Policy and Controversy
   • Kirsten Wielobob (kirsten.wielobob@ey.com)
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 1996 – 2024, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement