Cracking Down On Tax Evasion — Biden Proposes Plan To Fund $80B To IRS

Cracking Down On Tax Evasion—Biden Proposes Plan To Fund $80B To IRS

 

Last week, Internal Revenue Service Commissioner Charles Rettig told law makers that the tax gap could be well above $1 trillion and increase to an estimated $7.5 trillion over the next decade. To give some background on the matter, the last time a tax gap was estimated was in the tax years between 2011-2013. At that time, the difference between the taxes owed and the taxes paid on time were about $441B and approximately $381B after taking into account late filings. 

It has been nearly a decade since this report and the times have truly changed. The global cryptocurrency market cap is over $2 trillion, there is a growing rate of foreign sourced and illegally sourced income, and it is getting progressively more difficult to enforce the tax code due to the volatility of funding from congress. To summarize Mr. Rettig’s statement to the senate panel, there is a lot of taxes that have not been paid, the times are changing, and the IRS is underfunded and “outgunned.” 

Since then, President Biden has proposed to fund $80B to the Internal Revenue Service over the next decade. The Biden administration believes that excess funding will help to generate approximately $700B within the next 10 years in net revenue. The increase in revenue would help the IRS increase the number of declining employees and resources in order to be more efficient in conducting audits and collecting money. There are about 6,500 individuals in the front lines of the IRS according to Mr. Retting and they are all concentrating their efforts on auditing the wealthiest corporations and high net worth individuals.  

From the $7.5 trillion tax gap estimate, the Biden administration stems to collect approx. 10% in order to fund the American Families Plan. The $1.8 trillion is meant to be financed by additional taxes on high earners. The administration stated that the additional resources would “go toward enforcement against those with the highest incomes, rather than Americans with actual income less than $400,000.” In addition to funding the IRS, the American families plan would provide for child care, make Pre-kindergarten and community colleges free, extend the child tax credit and, finance teacher training, and much more. 

Vic Abajian is a former IRS tax attorney located in Los Angeles that assists wealthy clients throughout the world navigate and successfully resolve complex and sensitive tax issues.  He has over 20 years of experience in the tax world including extensive experience with foreign bank account (FBAR) examinations

Search Our Blog
Contact Us
  • GLENDALE OFFICE:
    500 N. Brand Blvd., Suite 1740
    Glendale, CA 91203
  • LOS ANGELES OFFICE:
    1999 Avenue of the Stars, Ste. 1100
    Los Angeles, CA 90067
  • IRVINE OFFICE:
    One Park Plaza, Suite 600
    Irvine, CA 92614
  • Phone no

    Tel: 818-396-5059