Massachusetts Democrat Senator Elizabeth Warren has proposed giving the Internal Revenue Service a mandatory yearly budget of $31.5 billion for the 2021 fiscal year. Previously, the agency’s budget was set at $11.9 billion, which they received from Congress for the fiscal year 2020. The legislation proposed by Warren is designed to remove IRS funding from the yearly appropriations process. According to tax attorneys, this means that the amount would not fluctuate based on the whims of Congress from one year to the next.

Warren Says More Funding is Required to Help IRS Pursue Tax Cheaters

On Monday, Sen. Warren released a summary of the legislation and stated that additional and more stable funding is required if the IRS is to successfully go after rich people who cheat on their taxes. The senator stated that the mandatory funding would provide a sustained stream of money that lobbyists could not strip away from the agency. Tax lawyers state that this would allow the IRS more latitude in pursuing cheaters.

The legislation introduced by Sen. Warren includes numerous ideas that are similar to those found in President Biden’s “American Families Plan.” Biden’s IRS enforcement provisions called for $80 billion in cash to be given to the IRS over the course of 10 years. According to the Treasury Department, the availability of such funds would lead to an estimated $700 billion in additional tax dollars which would be collected from those who are currently manipulating the system to avoid paying.

Democrats have made it a priority to find ways to improve the IRS’s ability to enforce tax regulations and collect unpaid taxes from the rich. The party claims it is an avenue through which to gather revenue for spending priorities such as infrastructure without having to raise taxes on the general taxpayers. Although the amount Biden proposed was questioned by some individuals, the Treasury Department claims that the estimate is actually on the conservative side.

Warren’s plan, referred to as the “Restoring the IRS Act,” would give more power to tax collectors and allow them to call in more money than even Biden’s proposal would. Warren did not make a total revenue estimate for her bill available, but referred to research that concluded tax collectors could raise an extra $1.75 trillion over the next 10 years by halting tax evasion among those in the top 1 percent.

How the Money Would be Spent

According to the bill outline, the funds would assist the IRS to enforce tax regulations, upgrade outdated IT systems, and improve services for taxpayers. Taxpayer needs have not been adequately met in recent years, with only about 2 percent of calls to the agency being answered in the first quarter of 2021.

The legislation would also require that the IRS shift tax audits to wealthy individuals, analyze racial disparities, and make tax penalties higher for individuals who earn at least $2 million annually but are guilty of underpayment of taxes.

The IRS would also have to report discrepancies between taxes paid and taxes owed on a yearly basis. Currently, this figure is reported only every five years, and often the numbers are outdated by the time they are released. IRS Commissioner Charles Rettig told a congressional panel that the agency loses about $1 trillion a year to tax evasion from cryptocurrency and offshore activities. For this reason, it may be wise for those who use bitcoin as an investment to seek the advice of a cryptocurrency tax lawyer. It is not yet known whether or not the proposed legislation will meet with success, but those facing a tax audit or who need help with filing a return should schedule an appointment with an IRS tax attorney at their earliest convenience.

Super-Rich Headed to Puerto Rico With an Eye on Tax Breaks

Super-Rich Headed to Puerto Rico With an Eye on Tax Breaks

Because Puerto Rico offers substantial tax advantages, a new trend has begun: cryptocurrency traders, hedge-fund managers, and wealthy individuals have been exiting the mainland to Puerto Rico to avoid President Biden’s proposed increases on capital-gains tax. These...