By Lore Ramirez
May 4, 2024, 08:00 AM EDT
Although Many taxpayers have been breathing easy for several weeks knowing that the 2024 tax season is over, some are not so relieved. Many people submitted their tax documents, money transfers began and IRS confirmed tax refunds are on the way; but for some the fiscal year 2023 process has another result.
No one files their tax return hoping to receive an audit letter from the Internal Revenue Service. and when it happens it can be extremely stressful because it is a process that can take a long time or even involves speaking with a tax inspector in person. The news? That Audit fees are going to triple according to the IRS. Read on to find out the details and who will be affected with this modification.
What is an IRS audit?
NerdWallet explains that An IRS audit “is an examination or review of your information and accounts to ensure that you are reporting things correctly, following the tax laws and that the amount of taxes declared is correct. In other words, the IRS is simply double-checking your numbers to make sure there are no discrepancies in your return.”
The financier explains that tax audits can occur randomly, either because your tax return is linked or another audited file or due to shady activity. “The IRS conducts tax audits to minimize the ‘tax gap,’ or the difference between what is owed to the IRS and what the IRS actually receives,” explains NerdWallet about the scenario taxpayers are currently seeing in the Plan. Strategic Operation of the Internal Revenue Service.
On May 2, the Internal Revenue Service announced its plans to reinforce financing and explained how the agency will implement its Strategic Operating Plan. According to Danny Werfel, commissioner of the IRS, it is planned to increase audit rates and consequently, protect the pockets of the United States Department of the Treasury.
Who will be affected by the increase in IRS audits?
Before you panic it is important to know that the objective of this Increase in audits will target “the wealthiest taxpayers, large corporations and large, complex partnerships”. The IRS says taxpayers can expect to see an increase in audits over the next three tax years.
But for people whose annual income is less than $400,000, their returns will mostly not be affected. “There is no new wave of audits coming from [individuos] middle and low income, coming from mom and dad. That is not in our plans,” Werfel explained to CBS News.
Wealthy people earning more than $10 million a year will have a 16.5% chance of being audited in fiscal year 2026, according to the IRS notice. Meanwhile, the Internal Revenue Service is tripling the audit rates of large corporations with assets totaling more than $250 million, and those large, complex partnerships with assets of more than $10 million will see an increase in audits of 0.1% to 1% in fiscal year 2026.
According to Werfel, the increase is strategic. Instead of harping on low- and middle-income taxpayers, The IRS is refocusing its time and resources on taking strong action against high-profile taxpayers and companies trying to game the system.. “It sets an important tone and message for complex filers, high net worth filers, that this is our area of focus,” Werfel said.
Keep reading:
– Child Tax Credit 2024: what will the increase be if it is finally approved
– Do you have questions about your tax refund? This is the way I was able to consult it
– IRS taxes: tips for parents who have children under 17 years old