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IRS tax collection considering the pandemic and elections

On Behalf of | Dec 7, 2021 | IRS Updates |

According to the U.S. Government Accountability Office, the IRS shut down most office activities between March and July 2020 to protect its employees from COVID19. It also halted all in-person enforcement activities, including the mail service.

Over several months, the IRS enhanced technology tools such as video conferencing to reach the taxpayers with ease. The extra time created provided an excellent opportunity for individuals and organizations to comply with the requirements on time.

Unfortunately, when businesses returned towards the end of the year, the heated political environment and subsequent election-related legal battles further slowed tax collection. However, the IRS bounced back after Biden’s administration took power, hoping to clear the case log and meet the tax collection targets they had missed earlier. 

The IRS uses various tools to improve its tax collection

According to the Tax Foundation, the IRS is looking for ways to fund the Biden administration’s $3 trillion infrastructure spending proposals. One of the programs it’s using is the American Families Plan that increases avenues to bridge the tax gap in the country. 

The approach encompasses different activities, including the increase in enforcement budget and technology tools to reach out to the taxpayers. Some of the technology tools that the IRS is using include fax, and online messaging services where taxpayers can file. The aggressive enforcement also includes penalties, high interest and lawsuits, especially for high-value businesses.

The Treasury estimates that it generates $6 for every $1 it spends on detecting and collecting already owed taxes. However, the IRS has been having a shortfall in cash for nearly a decade; the number of agents qualified to examine complex returns continues to plummet. That notwithstanding, the increased enforcement is likely to raise the deterrence value and force non-compliant taxpayers to pay. 

How can you become tax compliant?

The IRS initiated a People First Initiative in 2020 that seeks to scale back enforcement and collection activities during the pandemic. This program provides methods to comply with tax requirements and pay in flexible installments. However, the program does not prevent the IRS from enforcing all applicable statutes of limitations and does not cover large businesses.

You should settle your compliance issues, if any,  or deal with enforcement initiatives if you have not paid all your taxes. It is also essential to reach out to the IRS for a workable payment plan to avoid accruing penalties and high interest.