The Internal Revenue Service (IRS) is slowly reopening offices. According to a recent post in Accounting Today, the agency has opened all but a few offices and plans on opening remaining facilities by July 13, just days before the most recent tax deadline extension set for July 15.
Upon its reopening, the agency recently announced it will begin a new initiative to focus audit efforts on high wealth taxpayers. Thus far, the agency has announced a focus on two specific segments of high income earners: those connected to a pass-through business structure like partnerships and S-corporations as well as taxpayers who have a private foundation.
What triggered the initiative?
The IRS has stated it will put this new initiative into effect with its reopening on July 15. The initiative was, at least in part, triggered by Treasury Secretary Steven Mnuchin when he called on the agency to increase its audit rate for high income earning taxpayers in March of 2020. The enforcement initiative will make use of data analytics in an attempt to make the audits as efficient as possible.
Any tips for taxpayers that meet the initiative’s focus?
Those who are connected to a pass-through business or use a private foundation are wise to take action to protect their interests. This can include retaining a tax professional to review your tax situation. Have this professional check for compliance. If not, discuss changes that could help better ensure compliance. This process can also result in the organization and preparation of paperwork, easing the way for a prompt response in the event of a federal tax audit.