Quotes from Eric Hylton, Former IRS Commissioner of the Small Business/Self Employed Division; alliantgroup National Director of Compliance
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- Agency needs to recruit employees to review complex returns
- IRS expects decline in exam starts for large corporations
Expectations are high that the IRS will beef up tax enforcement with its new $80 billion in multiyear funds from the Inflation Reduction Act, but it will take some time for that to come to fruition.
The IRS has been able to spend some of the funds for taxpayer services quickly, leading to a smoother tax-filing season this year. However, it will take longer for the IRS to hire and train new enforcement personnel and boost the number of audits on wealthy households and complex businesses.
Of the roughly $80 billion in multiyear funds, $45.6 billion is for enforcement.
Robert Kovacev, a member at Miller & Chevalier, said the IRS is “digging themselves out of a hole” because it had insufficient resources in enforcement for at least a decade.
“Inevitably there’s going to be some lag between when they get the money, when they spend the money, and when we will see an effect on the ground,” he said.
Budget Proposal
The agency has yet to release its full strategic operating plan for the $80 billion, but a recent budget document provides some insights into how the Biden administration hopes to use the tax-and-climate law funds, as well as annually appropriated funds, in the near term.
The IRS is aiming to do a significant amount of enforcement hiring in the coming years, proposing using the Inflation Reduction Act funds to support 7,239 full-time equivalent enforcement employees in fiscal 2024. The IRS said in the document it is aiming to do a lot of hiring in enforcement in the short-term so new employees can be trained by experienced personnel who may be retiring soon.
But the hiring won’t instantly translate to a sustained audit boom, particularly for businesses.
Eric Hylton, a former senior IRS official who now serves as national director of compliance at alliantgroup, said the IRS will need to take a “multipronged perspective” on hiring that includes looking at mid-level hires who can handle complex issues who may only stay for a few years before returning to the private sector.
About Eric Hylton
Hylton held several prominent positions at the IRS, including serving as Deputy of the Criminal Investigation Division and as CI’s head of International Operations. As National Director of Compliance, Eric employs his years of experience at the IRS to assist alliantgroup’s clients as an ambassador for U.S. small and medium sized businesses (SMBs) and in helping others become tax compliant.
