• Biden looking to increase the IRS’s budget, hoping for a high return on investment (ROI)
  • This method is grabbing bipartisan support by increasing tax revenue without changing tax code

Joe Biden has been looking to secure roughly $80 billion in additional funding for the Internal Revenue Service (IRS) over the course of the next decade to help the agency crack down on tax avoidance audits. The underlying hope is that stricter audits by the IRS will discourage tax evasion schemes by America’s top 1% and big businesses.

Potential Revenue Generated

Treasury officials project that the plan would generate roughly $700 billion over the next 10 years and $1.6 trillion in the following decade. In addition to increasing IRS audits, the new budget would also feed off of cryptocurrency funding .

What’s The Plan?

There are two key components in enforcing this policy.

  1. Increase IRS staffing by nearly 87,000 employees over the next decade, giving the agency the resources they desperately need to get through all backlogged and current year tax returns.
  2. Increase the IRS’s ability to look at business income by using the help of banks to curb unreported income.
    • This proposal would require banks and peer-to-peer payment services, like Venmo, to report inflows and outflows of cash to the IRS.
    • Additionally, the IRS would require businesses receiving more than $10k in crypto to also make such inflow/outflow reports.

Both of these changes would help to—over time—increase both the accuracy and severity of IRS audits.

The prospects of a high ROI from minimal tax code changes is grabbing attention from both Democrats and Republicans.

Banks Likely to Push Back

We can expect to see some—or a lot—of pushback from banks. These new policy adjustments would directly correlate to increased administrative costs, security, and overall work on the bank’s end.

Thoughts? Share them with us at 516-541-6549 and don’t forget to check out our website to stay up to date on all tax news.

Devin McQuillan
Associate, Creative Solutions

Contact:
516-541-6549 | Email

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