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The U.S. government collected a record amount of taxes from Americans but will increase the monitoring of bank accounts and mobile payment systems to collect more.
The IRS says in its newly released Data Book that during the 2022 fiscal year, about $5 trillion in taxes were collected. The fiscal year 2022 ran from Oct. 1, 2021 to Sept. 30, 2022. It issued 242 million refunds totaling nearly $642 billion. Business income taxes amounted to around $476 billion while individual, trust and and estate taxes came in near $2.8 trillion.
IRS Commissioner Danny Werfel said in an introduction to the Data Book that the agency’s commitment to maintaining a “visible, robust tax enforcement presence” is “strong.”
In a press release accompanying the data, the IRS claimed it would focus on high-income and high-wealth individuals, complex partnerships, and big corporations with its enforcement efforts but tax analysts say that there’s not enough wealthy individuals and businesses to account for the additional tax auditors that are being hired.
The agency recently received an $80 billion funding boost over 10 years, with part of the funds going to hiring more staff, including in areas of tax enforcement. This has fueled concerns about an increase in tax audit rates among lower and middle-income Americans, which the IRS has said repeatedly would not be the case.
The IRS recently released its strategic operating plan (pdf), in which it identified certain transactions as being at high risk of noncompliance and vowed to ramp up enforcement in some areas.
Crackdown on your PayPal and Venmo
The agency says it will begin auditing bank accounts showing digital asset transactions as well as other digital payment options popular with Americans. These include everything from Apple Pay, Venmo, Paypal and others. The agency says Americans are not complying with the regulations and will now question deposits into bank or online accounts totaling more than $600.
“The IRS tracks many known, high-risk issues in noncompliance, such as digital asset transactions, listed transactions, and certain international issues. These issues arise in multiple taxpayer segments, and data analysis show a higher potential for noncompliance,” the IRS wrote.
“We will prioritize resources to increase enforcement activities, including criminal investigation as appropriate.”
The tax agency, which has the lowest favorability rating of any government agency, stated that it will develop an information platform to support digital asset reporting and analytics tools that have access to bank account records and third-party platform mobile payment systems with the aim of forcing compliance with the new rules.
The agency stated that it’s rolling out a new program of “tailored post-filing treatments” to resolve issues and omissions on tax returns to provide an opportunity to remedy them before proceeding to a tax audit.
The IRS will use “advanced analytics” to distinguish taxpayers who make good-faith mistakes on their tax returns from those trying to avoid paying what they owe.
The program would then notify the honest-but-errant taxpayers in a way that gives them an opportunity to “self-correct.”
–Wire services
Most people will just see numbers, without any context. So, let’s add some context. The Federal Budget Office estimated the 2022 revenue at 4.174 trillion, fairly close to the 5 trillion minus 642 billion. It was projected to incur a 1.837 trillion deficit. The CBO predicted the 2021 deficit would originally be 2,3 trillion, but that was raised 3 trillion, so enough with projections and numbers.
To understand these numbers one has to look at the numbers year to year. Simply put, we are spending too much. We are already at a point where we no longer receive enough in taxes to cover no-discretionary spending and interest.
With that in mind, a little logic goes a long way. We have heard that the IRS is hiring 87000 IRS agent to go after the rich. Logically how long does it take to hire and train an IRS agent, especially one taking on taxpayers that can hire tax attorneys. So, we go after souls earning and reporting tip income, and we go after taxpayers through electronic payers. These are not the rich. It is a very helpful concept to remember that we have an income tax, not a wealth tax.