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If you have any questions or concerns, please use the contact information provided in this email as this inbox is not monitored for replies.
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New White Paper Says New IRS Funding Expected to Increase Focus on Partnerships, Corporations, and High Net-Worth Earners
Despite recent debt ceiling negotiations, the Internal Revenue Services’ anticipated Inflation Reduction Act Strategic Operating Plan (IRA Plan) is aimed squarely at increasing taxes on complex partnership structures, large corporations, and high net-worth individuals, according to a new report by national business valuation firm, MPI.
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The report details how a potential “audit storm is brewing,” a result of the IRS’s increased funding for its IRA plans. Early estimates by the Congressional Budget Office showed the new enforcement efforts to increase tax revenues by $180 billion.
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Originally, the IRS was getting $80 billion for tax enforcement and operations, but the recent debt ceiling deal hammered out with Congress and the White House means roughly $29 billion could now be spent on additional enforcement and auditing over the next 10 years as opposed to the $45 billion originally allocated for enforcement
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Nevertheless, the MPI report notes, the IRA Plan states, “the IRS will increase enforcement activities to help ensure tax compliance of high-income and high-wealth individuals” as it has not had sufficient resources for enforcement in the past to ensure “they are paying the taxes they owe.”
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The MPI report was written by Thomas Berg, Jr., Managing Director, MPI, San Francisco, and David M. Eckstein, Managing Director, MPI, Seattle.
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“The first wave of specialists hired and onboarded to increase compliance coverage rates for high-income and high-wealth individuals will occur this year,” said Berg about the new IRS focus. According to the plan, he says, hiring will start with accountants, attorneys, and data scientists with the education and experience to pursue these tax filers.
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“It’s anticipated there will be a meaningful uptick in estate tax, gift tax, and charitable deduction income tax audits for high-income and high-net-worth individuals going forward,” said Eckstein. “As a result, be at the ready to defend valuations at the examination or appellate level, or in Tax Court, if necessary,” he added.
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The white paper by MPI “provides a clear warning to family business owners trying to understand what these new IRS enforcement measures mean,” said Pat Soldano, President of Family Enterprise USA and Policy and Taxation Group. “It’s expected valuation issues historically targeted by the IRS, such as discounts for lack of marketability and control, tiered discounts, and tax-affecting pass-through entities, among other issues, will be ripe for audit by an expanded IRS,” said Soldano about the report.
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Upcoming Events
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July 26: Webcast, Mack International, Virtual
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August 9: FEUSA/PATG luncheon event, Denver, CO
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August 10: Family Office Reception & Presentation, Chattanooga, TN
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September 11-12: University of Cincinnati Annual Gala, Cincinnati, OH
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September 12: “Protecting The Wealth Of Family Businesses In A Volatile Tax Environment”, Virtual
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Sign-Up For New Podcast: "Voice of Family Business on Capitol Hill" with host Pat Soldano.
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Join our growing family of podcast listeners by clicking on the links below to our new podcast, "The Voice of Family Business on Capitol," where each episode delves into the major issues facing family businesses and family business centers today. Subscribe by clicking on these links, or wherever you get your podcasts.
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We hope you’ve enjoyed this article. While you’re here, we have a small favor to ask…
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The need for fact-based reporting of issues important to family offices and successful individuals and protecting a lifetime of savings has never been greater. Now more than ever, family offices and successful individuals are under fire. That’s why Policy and Taxation Group is passionately working to increase the awareness of issues important to family offices and successful individuals, while continuing to strengthen our presence on Capitol Hill.
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About Policy and Taxation Group
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Have questions or would like more information about becoming a Supporter or donating? Please contact John Marino at [email protected].
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Policy and Taxation Group Strategic Partner
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