Within days of the passing of the Inflation Reduction Act in August, the IRS, having received an estimated $80 billion windfall, put out the call for new agents. You might have seen the posts on social media – memes and talking heads sharing the “fact” that 87,000 armed agents were going to be kicking in doors to get the money the federal government was owed.
The downside was this: there actually was a hiring post from the IRS that was looking for agents that would be armed. (more on that, later…)
So, who’s coming for your money?
Well, for starters, not 87,000 new IRS agents… but there’s a grain of truth in that, too…
The “87,000” number stems from a 2021 report from the Treasury Department, stating that with retirements and normal attrition, the IRS would have to hire nearly 87,000 people to handle the estimated workload of the agency in the coming decade.
…And yes, some of them would actually be armed. A little known branch of the IRS does carry sidearms – the IRS CID. Personally, that’s what I hope the reference to armed agents comes from. The IRS CID, a division that focuses on enforcement of criminal tax cases, and special agents are authorized to carry firearms in certain circumstances. That’s because those approximately 2,100 agents work on cases where arrests are sometimes warranted.
Now that we can hopefully not worry about the IRS kicking in the doors, let’s talk about where some of the money they’ve got earmarked should go…
I hope (and pray!) it goes to update the computer systems the IRS uses. Last I checked, they were still using some based in COBOL, which, for those of us of a certain age, was one step about “BASIC” in computer programming. Seriously, COBOL is about 50 years old. Based on how the IRS handled the pandemic and the subsequent tax seasons, anything that will make them more efficient is okay with me.
Simply having streamlined computer systems should allow the IRS to move far faster in term of filing returns and issuing refunds than we’ve ever seen in the past.
One key frustration – or question – I have, though, as a tax professional, is this: how many of these new agents are going to be handling audits? In the last decade, the number of audits we’ve seen in among low- and middle-income earners is far out of proportion to those high-net-worth individuals and corporations, and the Inflation Reduction Act specifically mentions the attempt to close the $600 billion tax gap between taxes levied and taxes collected.
For me, this is a simple case of picking on those who don’t have the means to defend themselves. Think about it: the biggest companies in the world have tax professionals on staff and the ability to drag tax cases out for years, in not decades. In the end, it’s likely that any tax owed would be from a settlement, and a fraction of the real amount owed.
On the other hand, the IRS could come to your home or business and “audit’ you far faster.
I’m incredibly worried about how that scenario could play out – and tax professionals have long taken the view that it’s nearly impossible to “fight” these smaller cases. Honestly? In many cases, it might cost a client more to fight an audit that found the taxpayer owed an extra $500-1,500 than it would to simply pay the bill.
Unfortunately, this is bringing us dangerously close to a failure of due process… and I hope I’m wrong.