Another individual recently pleaded guilty to filing false tax returns and skimmed more than $670,000 from his business, according to the agency. The individual also spent $502,000 on gambling and $110,000 on personal expenses.
A third individual fraudulently obtained $5 million in COVID-19 relief loans for a sham business and then spent the money to fulfill personal needs, buying multiple cars, including a Lamborghini and a Ferrari. This person was sentenced to 54 months in federal prison. –Epoch Times
The IRS credited last year’s Inflation Reduction Act (IRA) as contributing to the tax collection efforts. “Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented the IRS from keeping pace with the increasingly complicated set of tools that the wealthiest taxpayers use to hide their income and evade paying their share,” the tax agency said. “The IRS is now taking swift and aggressive action to close this gap.”Skeptics aboundWhile the IRS contends that its enhanced collections efforts are aimed at making wealthy taxpayers pay their fair share, Sen. Joni Ernst (R-IA) has questioned the Biden administration.In an April 18 letter to IRS Commissioner Daniel Werfel, Ernst pointed out that the Inflation Reduction Act funding over 10 years was designed to “enhance collections efforts toward American taxpayers and increase the IRS workforce to over 105,000 employees by 2025.””President Biden has repeatedly stated that these efforts would be directed to ‘billionaires’ and wealthy taxpayers,” she wrote.”However, the strategic plan states in Part II, Objective 3.5 that IRS will pursue increased audit rates of any business earning more than $400,000 to enhance collections efforts towards large corporations and wealthy individuals.”Ernst cited government data showing that the average small business employing around five workers had annual receipts exceeding $424,000.”It is abundantly clear that small businesses will bear the brunt of these enforcement efforts, not solely large corporations and the wealthiest taxpayers,” she wrote.As the Epoch Times notes further, earlier this month, the IRS insisted on strengthening compliance efforts by pointing to the burgeoning tax gap—the difference between what is owed and what is actually paid to the government.For tax year 2020, the IRS estimates the gap to be $601 billion. For 2021, it is estimated to be $688 billion, which is “a significant jump” from previous estimates, the IRS stated. The 2021 tax gap is $192 billion more than estimates from 2014 to 2016 and $138 billion more than 2017–2019.“This increase in the tax gap underscores the importance of increased IRS compliance efforts in key areas,” Mr. Werfel said. “With the help of Inflation Reduction Act funding, we are adding focus and resources to areas of compliance concern, including high-income and high-wealth individuals, partnerships, and corporations.”In an Aug. 16 statement, the IRS stated it was cracking down on schemes that wealthy people were using to evade taxes. One scheme involved about 100 high-income Americans who claimed benefits in Puerto Rico without meeting the rules regarding U.S. possessions.Another scheme involves a Malta-based personal retirement program used by certain Americans to avoid U.S. taxes. At the time, the IRS said it was “working to identify taxpayers who are improperly using Malta-U.S. Treaty rules to improperly claim exemptions.”Despite the IRS’s claims of targeting wealthy people, it has historically audited lower-income people the most, according to a January report by Syracuse University’s Transactional Records Access Clearinghouse.“If one ignores the fiction of auditing a millionaire through simply sending a letter through the mail, the odds that millionaires received a regular audit by a revenue agent (1.1 percent) was actually less than the audit rate of the targeted lowest-income wage-earners whose audit rate was 1.27 percent,” the report stated.The rate of income tax audits per 1,000 individuals stood at 12.7 for the lowest-income wage earners and 2.3 for everyone else.The report authors wrote that low-income wage earners have historically been targeted by the IRS not because they account for the most underreporting but because they are seen as “easy marks in an era when IRS increasingly relies upon correspondence audits yet doesn’t have the resources to assist taxpayers or answer their questions.”More By This Author:Regional Fed Surveys Show Prices Jumping As Business Outlooks SlumpChina Kicks Fiscal Stimulus Into Overdrive With Deficit-Busting 1 Trillion Yuan In New DebtAlphabet Plunges 6% After Google Cloud Results Disappoint
