The IRS has had its budget slashed by Congress, and has, among other things, tried to replace the revenue by stepping up efforts to close the Tax Gap (unpaid taxes) of $346 Billion. Examples are:
- Liens are up 1600% since 2005. Liens are put again property of taxpayers for unpaid taxes.
- Levies are up 500%. Levies are put against taxpayer bank accounts to collect unpaid taxes.
- 11.4 million taxpayers are currently behind on taxes. This is a real can of worms because many of the tax notices are incorrect but go uncontested by the taxpayers. Then the IRS just piles on the penalties and interest.
- $13.6 Billion in penalties have been assessed for just income tax returns. This spans personal, business and payroll taxes. Penalties may be abated if handled correctly.
- More than three quarters of the IRS audits are now handled through electronic matching in information. I good portion of these audits can be managed with “no change” results, but this is only if taxpayers are proactive.
