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Inflation Reduction Act Part III: More Auditors, More Audits

inflation reduction act

More than half of the $80 billion Inflation Reduction Act will be spent on IRS enforcement. This specifically means collecting back taxes, conducting criminal investigations, monitoring digital assets, obtaining legal support and hiring thousands of new IRS auditors. 

How many auditors will the IRS hire? 

The IRS is looking to hire nearly 87,000 employees over the next 10 years. This is a major increase from its current 80,000 employees. A majority of the new hires will help bring IRS staffing levels back up to par to maintain efficiency. As of now, it remains to be seen exactly how many of the new hires will be responsible for auditing. The IRS will determine the number of enforcement agents they hire. 

Who will be audited? 

More auditors mean more audits, so understandably taxpayers are wondering if they will be impacted. The U.S. Treasury Department has said that the low and middle-class, as well as small businesses, will not be the focus of the upcoming increased enforcement activity. The IRS is to focus its auditing efforts on high-income taxpayers and large corporations. Specifically it will focus on those that earn more than $400,000 per year. The bill itself includes language that states the goal of the Inflation Reduction Act is not to increase taxes for any individual or entity earning less than $400,000 per year.  

Are you prepared for an audit? 

All in all, with increased IRS enforcement activity approaching, it’s important to be prepared. It’s never too late to seek tax relief. Let Optima’s team of experts help you get protected from the stress and burdens that come with IRS enforcement. Optima Tax Relief is the nation’s leading tax resolution firm with over a decade of experience helping taxpayers.  

If You Need Tax Help, Contact Us Today for a Free Consultation 

Inflation Reduction Act Part II: IRS Spending

Inflation

Between the inflation, the pandemic, and the Inflation Reduction Act, now is a scary time to owe back taxes. The bill has passed, granting the IRS $80 billion dollars in funds for their activity. Consequently, we’re expecting a massive increase in the agency’s enforcement. Learn how the Inflation Reduction Act will affect IRS spending.

How will the Inflation Reduction Act will affect IRS spending?

Inflation Reduction Act funds will be added on to the annual money the IRS receives from Congress. This will be about $12.6 billion for 2022. Additionally, the 50% increase will be paid across four departments over the next ten years.

More than half of the funds are specifically going toward enforcement activity. IRS enforcement includes collecting back taxes, conducting criminal investigations, legal support, and monitoring digital assets. The other three areas that will also be supported include:

  • IRS operations- $25 billion for expenses such as rent, printing, postage, and telecommunications.
  • Customer service- $4.8 billion would be used for updating service technology. A callback service is in the talks.
  • Taxpayer assistance- $3 billion would go toward filing and account services or other taxpayer needs.

IRS Collections

With a large budget provided by the Inflation Reduction Act, the IRS is expecting to collect roughly $203 billion in federal tax revenue over the span of a decade. The net federal revenue would increase by more than $124 billion.

Government officials are also expecting the tax gap to close. So, the difference between the amount of taxes being collected and what taxpayers actually owe will be closer.

Tax Help for Taxpayers Who Owe

If you haven’t started the process of tax debt relief, it’s not too late. Preparing yourself with a team of professionals that are already working on your compliance could spare you from more penalties, stress, and possibly help you save some money. Optima Tax Relief is the nation’s leading tax resolution firm with over $1 billion in resolved tax liabilities.  

If You Need Tax Help, Contact Us Today for a Free Consultation 

Inflation Reduction Act Part I: What is it?

Inflation Reduction Act Part I: What is it?

From a pandemic to inflation, American taxpayers haven’t been able to catch a break since 2020. To combat the current state of the economy, Senate has passed a new bill with a ten-year plan. The Inflation Reduction Act is being sent to President Biden’s desk, requesting nearly $80 billion to the IRS.

What is the Inflation Reduction Act?

While the funding will support the IRS, this will hopefully bring in more federal tax revenue to offset the cost of lowering prescription medicine and combating climate change. There are plans in motion to accomplish these goals, but federal funding to do so is lacking.

How will the IRS use these funds?

The IRS has been waiting for additional funding for years. In the last ten years, their activities have dwindled, and the agency’s budget decreased more than 15%. While IRS Commissioner Rettig has previously stated that the backlog will be complete by the end of 2022, there are still 11 million unprocessed tax returns.

The IRS will hire more staff and have access to more resources, such as legal representation for larger cases.

Cons

Naturally, more staff and resources for the IRS means more IRS enforcement. This act could trigger more audits for middle class businesses and individuals.

Outcome of the Inflation Reduction Act

Government officials have also stated that the goal is not to go after small businesses, but rather the large corporations and high net-worth individuals with high-end noncompliance.

Senior Fellow at the Urban-Brookings Tax Policy Center Janet Holzblatt was quoted as saying, “The goal should not only be to increase audits, but improve the productivity of audits. You want the IRS to select the businesses and people for audits who really have not been compliant.”

How the Inflation Reduction Act affects people who owe

With more IRS enforcement on the way, it’s better to be safe and get in compliance as soon as possible. Optima Tax Relief is the nation’s leading tax resolution firm with over $1 billion in resolved tax liabilities.  

If You Need Tax Help, Contact Us Today for a Free Consultation 

An Update on Student Loan Forgiveness

An Update on Student Loan Forgiveness

Student loan debt is still on the rise and new developments regarding repayment and forgiveness have unfolded recently. President Biden will announce his plan for student loan forgiveness and repayment by the end of August 2022.  

Student Loan Payment Pause 

Loan payments are currently paused but are set to begin again on September 1, 2022. Payments have been paused several times since the Cares Act passed in March 2020. However, it seems the pause may be extended again past the August 31st deadline.  

Student Loan Forgiveness 

On the other hand, President Biden may announce a decision on student loan forgiveness. There has been some speculation that Biden plans to cancel $10,000 for more than 40 million federal student borrowers. Included loans are the Federal Family Education Loan Program (FFELP), Perkins Loans, Grad PLUS Loans, and Parent PLUS Loans, many of which have not been included in recent loan forgiveness initiatives.  

Limited Waiver 

A limited waiver was instituted in October 2021, allowing borrowers to count payments that were once considered ineligible toward forgiveness. Ineligible payments include late payments, partial payments and payments made under the incorrect payment plan. This one-time exception is due to expire after October 31, 2022. However, President Biden has named an extension of the waiver as another permanent means of loan forgiveness.  

Republican Repayment Plan 

Three Republican members of Congress introduced a new bill that serves as an alternative to President Biden’s potential plan. The plan does not include any major loan cancellation. It seeks to end the Public Service Loan Forgiveness program set to begin in July 2023 and the payment pause. The bill also introduces a new Income-Based Repayment (IBR) plan that would replace the current income-driven repayment plans. It would also eliminate capitalization of student loan interest. Finally, the bill would limits student loan interest to 10 years, which can save borrowers thousands of dollars.  

Tax Debt Relief for Student Borrowers 

While student loan forgiveness seems attractive to many, nothing is set in stone yet. That said, borrowers should continue to plan for repayment. Additionally, borrowers should remain mindful of available tax breaks and filing requirements. If you need tax help, give us a call at 800-536-0734 for a free consultation today. 

New IRS Voice Bot Options Shortens Wait Time

voice bot irs

Many taxpayers are hesitant about calling the IRS for several reasons, including the long wait time to speak with a representative. A phone call could take hours that you may not have to spare in your day to get answers to simple questions. The IRS launched what they believe to be the answer to this problem: voice bot options.

How the IRS Voice Bot Works

Generally, voice bots are artificial intelligence that allow callers to interact using verbal responses. Taxpayers with simple questions about payments, notices and other tax related inquiries can now avoid waiting for a live person to become available.

The voice bot offers services in both English and Spanish, aiding a large percentage of Americans.

Which Lines Have a Voice Bot?

While the IRS states that numerous lines now have voice bot options, it seems this feature will best be suited for Automated Collection System toll-free lines, Accounts Management, discussing payment plan options, and frequently asked questions.

So far, the voice bot has answered over 3 million calls. The IRS continues to add functions to help more taxpayers resolve their issues quickly.

Future Voice Bot Enhancements

Upcoming 2022 enhancements for the automated feature includes:

  • Account and return transcripts
  • Payment history
  • Current balance owed

The Economic Impact Payment line will also have responses for frequently asked questions.

Need more assistance?

Optima Tax Relief is the nation’s leading tax resolution firm with over $1 billion in resolved tax liabilities.  

If You Need Tax Help, Contact Us Today for a Free Consultation 

What are Non-Taxable Earnings?

non-taxable

There are instances where income will not be taxed, whether or not you report it during tax season. Understanding which earnings are taxable versus non-taxable could save you a lot of time and trouble when you file your tax returns.

Non-taxable earnings

The following forms of income are non-taxable:

  • Most healthcare benefits
  • Scholarships and student loans
  • Welfare payments
  • Reimbursements
  • Child Support payments
  • Inheritance
  • Gifted money (unless of significantly high value)
  • Alimony
  • Cash rebates

In order for income to be considered non-taxable, it must be legally exempt.

Taxable vs Non-taxable Income

Some examples of taxable income would be employee wages, or constructively received income. Constructively received income is income that is available to you before the end of the tax year. This could be in the form of cash or deposit.

If an agent receives income on your behalf, this is called assignment of income. Assignment of income is still taxable, even if a third party is accepting your earnings.

Prepaid income is another taxable compensation that may include payment for future services.

Are royalties non-taxable income?

Copyrights, patents, and other properties such as oil and gas are examples of royalties. These items are taxable as income.

Are business and investment earnings non-taxable?

Business earnings such as rental properties and other investments are very much taxable. Business owners are required to pay taxes quarterly to cover Social Security and Medicare tax.

While non-profit agencies are tax exempt, you still have obligations to file a return.

What to do if you have a tax liability?

Taxable and non-taxable income can be a confusing topic. It’s best to ask a professional for assistance if you’re unsure about how or when to report income. Should you find yourself in the midst of a tax liability that is unaffordable, give Optima a call at (800) 536-0734 for a free consultation.