IRS Releases Inflation Reduction Act Strategic Operating Plan: Is an Audit Storm Brewing for High Net-Worth Individuals?<\/h2>\n
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In early April, the IRS released its long-anticipated Inflation Reduction Act Strategic Operating\u00a0 Plan (\u201cIRA Plan\u201d) funded by nearly $80 billion over the next 10 years. The Congressional Budget Office has estimated that this plan will increase tax revenue by more than $180 billion, while the IRS believes it could be much higher.\u00a0<\/h3>\n
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The IRA Plan is expected to increase focus and compliance efforts on complex partnership structures, large corporations, and high net-worth individuals, where in recent years it has not had sufficient resources to do so. As a result, audit rates are expected to increase from today\u2019s low levels to much higher levels as the IRA Plan ramps up. Of the approximate $80 billion appropriation, it is expected that $47.6 billion of it will be used for enforcement efforts.\u00a0<\/p>\n
Notably, the IRA Plan states, \u201cthe IRS will increase enforcement activities to help ensure tax compliance of high-income and high-wealth individuals\u201d as it has not had sufficient resources for enforcement in the past to ensure \u201cthey are paying the taxes they owe.\u201d As a result, there is a likelihood of increased audits of gift, estate, and personal income tax returns due to the dramatic increase in resources.\u00a0<\/p>\n
Due to the increased examination of high-income and high-net-worth individuals, one may expect valuations used by these individuals will encounter significantly greater IRS attention going forward. Along those lines it is expected that valuation issues historically targeted by the IRS,\u00a0 such as discounts for lack of marketability and control, tiered discounts, tax-affecting pass-through entities, pre-sale transfers, IRC 2701 and 2036 issues, formula transfers, split-dollar life insurance and conservation easements will be ripe for audit by an expanded IRS.\u00a0<\/p>\n
In order to increase enforcement, \u201cthe first wave of specialists hired and onboarded to increase compliance coverage rates for high-income and high-wealth individuals\u201d will occur in 2023.\u00a0 According to the plan, this hiring wave will focus on the addition of accountants, attorneys, and\u00a0 data scientists with the education and experience to pursue these tax filers. During 2023 and 2024, the IRS will attempt to hire nearly 20,000 new employees, and approximately 7,200 of these employees will be for enforcement.<\/p>\n
In summary, it is anticipated that there could be a meaningful uptick in estate tax, gift tax, and charitable deduction income tax audits for high-income and high-net-worth individuals going forward. As a result, when illiquid assets are involved, taxpayers and their advisors are encouraged\u00a0 to hire top-tier valuation providers that will prepare excellent work products and be at the ready to leverage their extensive experience defending valuations at the examination or appellate level, or in Tax Court, if necessary.\u00a0<\/p>\n
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The issues we fight for or against with Congress in Washington DC include high income tax rates<\/a>, possible elimination of valuation discounts, increase in capital gains tax<\/a>, enactment of a wealth tax<\/a>, and the continued burden of the gift tax<\/a>, estate tax<\/a> and generation skipping tax<\/a>.<\/p>\n [\/et_pb_text][et_pb_button button_url=”https:\/\/familyenterpriseusa.com\/donate\/” button_text=”Become a Family Enterprise USA Member” button_alignment=”center” disabled_on=”off|off|off” admin_label=”Become FEUSA member button” _builder_version=”4.18.0″ _module_preset=”default” custom_button=”on” global_module=”6503″ global_colors_info=”{}”][\/et_pb_button][et_pb_divider color=”#397389″ divider_style=”dotted” divider_weight=”2px” _builder_version=”4.19.4″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_divider][et_pb_video_slider disabled_on=”off|off|off” admin_label=”Video Slider Family Business Stories 2″ _builder_version=”4.19.4″ _module_preset=”default” global_module=”6670″ global_colors_info=”{}”][et_pb_video_slider_item src=”https:\/\/www.youtube.com\/watch?v=y9VszpRjVDM” _builder_version=”4.19.4″ _module_preset=”default” global_colors_info=”{}” show_image_overlay=”off”][\/et_pb_video_slider_item][et_pb_video_slider_item src=”https:\/\/www.youtube.com\/watch?v=03T2VODneEg” _builder_version=”4.19.4″ _module_preset=”default” global_colors_info=”{}” show_image_overlay=”off”][\/et_pb_video_slider_item][et_pb_video_slider_item src=”https:\/\/www.youtube.com\/watch?v=fHIxWaTwK64″ _builder_version=”4.19.4″ _module_preset=”default” global_colors_info=”{}” show_image_overlay=”off”][\/et_pb_video_slider_item][et_pb_video_slider_item src=”https:\/\/www.youtube.com\/watch?v=TI7P07GbNdU&t=27s” _builder_version=”4.19.4″ _module_preset=”default” global_colors_info=”{}” show_image_overlay=”off”][\/et_pb_video_slider_item][\/et_pb_video_slider][et_pb_text admin_label=”FEUSA Statement” _builder_version=”4.20.2″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” link_option_url=”https:\/\/familyenterpriseusa.com\/donate-2\/” global_module=”5910″ saved_tabs=”all” global_colors_info=”{}”]<\/p>\n Family Enterprise USA<\/a> promotes family business and job creation, growth, and sustainability by advocating for family businesses<\/a>, their lifetime of savings, and the issues they face running their businesses every day. Some of the issues we fight for or against with Congress in Washington DC are high Income tax<\/a> rates, possible elimination of valuation discounts, increase in capital gains tax<\/a>, enactment of a wealth tax<\/a>, and the continued burden of the gift, estate taxes<\/a> and generation skipping taxes<\/a>. Family Enterprise USA represents and celebrates all sizes and industries of family businesses<\/a> and multi-generational<\/a> employers.<\/p>\n Family Enterprise USA<\/a> (FEUSA) is a 501(c)(3) non-profit organization. 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Eckstein, CFA IRS Releases Inflation Reduction Act Strategic Operating Plan: Is an Audit Storm Brewing for High Net-Worth Individuals? In early April, the IRS released its long-anticipated Inflation Reduction Act Strategic Operating\u00a0 Plan (\u201cIRA Plan\u201d) funded by nearly $80 billion over the next […]<\/p>\n","protected":false},"author":2,"featured_media":8195,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","content-type":"","footnotes":""},"categories":[43,48,78,76,36],"tags":[],"class_list":["post-8194","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-estate-taxes","category-family-businesses","category-in-the-news","category-income-taxes","category-taxes"],"acf":[],"_links":{"self":[{"href":"https:\/\/familyenterpriseusa.com\/index.php?rest_route=\/wp\/v2\/posts\/8194","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/familyenterpriseusa.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/familyenterpriseusa.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/familyenterpriseusa.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/familyenterpriseusa.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8194"}],"version-history":[{"count":8,"href":"https:\/\/familyenterpriseusa.com\/index.php?rest_route=\/wp\/v2\/posts\/8194\/revisions"}],"predecessor-version":[{"id":8209,"href":"https:\/\/familyenterpriseusa.com\/index.php?rest_route=\/wp\/v2\/posts\/8194\/revisions\/8209"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/familyenterpriseusa.com\/index.php?rest_route=\/wp\/v2\/media\/8195"}],"wp:attachment":[{"href":"https:\/\/familyenterpriseusa.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8194"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/familyenterpriseusa.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8194"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/familyenterpriseusa.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8194"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/familyenterpriseusa.com\/wp-content\/uploads\/2021\/12\/MPI-sponsors-page.jpg\" "\\"\\"")
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<\/strong>MPI (Management Planning Inc.) is a business valuation, litigation support, forensic accounting and M&A advisory firm providing valuations for a variety of tax, financial reporting, litigation and other business applications, as well as corporate advisory services to business owners and their representatives.<\/p>\nWe hope you’ve enjoyed this article. While you’re here, we have a small favor to ask…<\/em><\/h4>\n
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