From the Tax Law Offices of David W. Klasing - Does the IRS' Hiring Spree as Supported by Biden Indicate that They Are Serious About Increasing Enforcement Action?

IRVINE, Calif., Aug. 3, 2021 /PRNewswire/ -- President Joe Biden is wasting no time in bolstering the IRS with an additional influx of employees scheduled over the next decade. The proposal comes as part of a larger package that includes $80 billion for the department over the same time frame. With such a significant increase in capability, one might reasonably wonder whether to expect more tax code enforcement in the coming months and years.

It would only make sense that the government expects to reap what it sows. Federal officials project the cash infusion into the IRS and hiring of additional agents will bring in additional revenue that will dwarf the overall investment in the IRS. The only way that this plan comes to fruition is with a much more active, aggressive IRS. If you are concerned about the likely increase in tax code enforcement activity, you may elect to engage in a voluntary disclosure, which can protect you from criminal prosecution for past egregious intentional tax noncompliance, or cheating, for short. However, if handled incorrectly, a voluntary disclosure can do more harm to a taxpayer than good. You should only attempt to engagement in a voluntary disclosure with the guidance of a seasoned dual California licensed Criminal Tax Defense Attorney and CPA.

Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply. 

It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.

Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.

As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!

The California dual-licensed Criminal Tax Defense Attorneys and CPAs at the Tax Law Offices of David W. Klasing are highly experienced and comfortable taking on the federal government on behalf of our clients on daily basis. We have the universal understanding of all aspects of the tax code to ensure that you are properly advised and protected against all eventualities. You can schedule your first consultation with our offices for a reduced rate by calling us at (800) 681-1295 or by scheduling online here.

IRS Set to Undergo Massive Expansion, Including Hiring Spree

The White House has introduced a plan that would have the IRS double in size, by way of a cash infusion of $80 billion over 10 years. Sponsored by the treasury department, President Biden specifically intends for the implementation of these changes to yield a higher success rate in enforcement of tax code violations by the highest income earners.

The plan provides for the introduction of roughly 87,000 new IRS employees over the 10-year period. The workforce expansion would be limited to 15% annually to avoid overwhelming the current system, but the announcement of such high numbers is clearly intended to scare would-be tax evaders into returning to a state of tax compliance.

The estimated annual difference between taxes owed and taxes collected, often caused by intentional noncompliance, has risen dramatically in recent years and poses a significant problem for the United States government. This anomaly, also known as the "tax gap," implies that recent tax evasion schemes have become so sophisticated that they have to date been largely successful in avoiding the gaze of the IRS' Criminal Investigations Division (IRS-CI).

Officials suggest that this is due to several factors, including the lagging technological savvy possessed and antiquated computer equipment utilized by the agency as well as the overwhelming burden that the currently understaffed department carries. This burden only grew during the COVID-19 pandemic, as the IRS was tasked with, amongst other responsibilities, issuing pandemic relief checks to most Americans.

The popularity and brazenness of domestic and offshore tax evasion schemes, particularly those involving offshore entities, is estimated to cost the IRS and the federal government well over $500 billion per year. IRS Commissioner Chuck Rettig told reporters in March that this figure could be timid, and even suggested that the tax gap could currently be as much as $1 trillion annually.

What Does an IRS Hiring Spree Mean for Taxpayers?

The Biden IRS expansion proposal represents the single largest supplement for the IRS in decades.  Rest assured that the Biden administration is not taking this step lightly. They expect a return on their investment. In fact, the administration suggested in announcing the proposal that they are expecting to recoup roughly $700 billion in unpaid taxes over the next decade.

The only way that the federal government hits this benchmark is through increased enforcement action. In other words, the IRS will have to spend that money to make money. The money will go towards hiring more staff, but it will also go towards upgrading their technological capabilities to be able to handle higher enforcement workloads. The money will also find its way into tax litigation & prosecution, allowing prosecutors to mount longer, more effective cases against criminal tax perpetrators.

Will Voluntary Disclosure Protect Me from Increased IRS Enforcement Actions?

With tax audits and criminal tax investigations likely on the rise, many taxpayers may be concerned about their level of past tax code compliance. If you are genuinely concerned about what a tax audit might uncover in the way of intentional noncompliance, it may be in your best interest to engage in a domestic or offshore voluntary disclosure.

Voluntary disclosure is a government-implemented program that allows for taxpayers who have previously intentionally fallen out of tax compliance with the Internal Revenue Code (IRC) to come clean with the government. A taxpayer may voluntarily disclose additional information on their past tax liability to clear their name and come above board with their situation and get right with the government without facing criminal tax prosecution if the terms of the program are strictly complied with.

After auditing & assessing a voluntary disclosure, IRS officials will come to a decision on the taxpayer's actual outstanding tax liability including penalties and interest. Depending on the nature of the noncompliance, the IRS will impose civil penalties, including the civil fraud penalty, but they can choose to waive or reduce the scale of these penalties based on the taxpayer's decision to fully cooperate and on the facts and circumstances regarding a taxpayer's overall record of compliance and nature of any underlying noncompliance.

However, voluntary disclosure is not a viable solution in all cases. In some instances, voluntary disclosure may not absolve the taxpayer of certain criminal conduct and may even implicate the taxpayer for the purposes of criminal prosecution. You should absolutely have the counsel of an experienced dually licensed California Criminal Tax Defense Attorney & CPA before deciding whether to engage in a domestic or offshore voluntary disclosure program.

Our Dual-Licensed Tax Defense Attorneys and CPAs Can Protect You Today

At The Tax Law Offices of David W. Klasing, we have the experience and resources to shore up your defenses against the impending onslaught of IRS enforcement actions. To schedule your initial consultation for a reduced rate, call our offices today at (800) 681-1295 or schedule online here.

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Public Contact: Dave Klasing Esq. M.S.-Tax CPA, [email protected]

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