What You Need to Know About the IRS’ $80 Billion Spending Plan

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The Inflation Reduction Act, which was enacted in August 2022, allocated close to $80 billion to the Internal Revenue Service (IRS), to be spent over the next ten years, in addition to the IRS’ annual funding. The IRS recently revealed part of its strategic operating plan, which details how they plan to use these funds. Below, we’re summarizing some of the key takeaways from their operating plan.

First, the IRS states five objectives they hope to accomplish with this funding:

  1. Improve the taxpayer experience.
  2. Resolve taxpayer issues faster.
  3. Expand enforcement efforts on high-income taxpayers and large businesses to address the tax gap.
  4. Operate more efficiently by utilizing cutting-edge technology.
  5. Hire and retain a skilled workforce.

The plan provides budget information for three fiscal years, during which the bulk of the money is allocated for operations. Additional budget is allocated to the following:

  • $4.3 billion for improved taxpayer services
  • $3.2 billion to quickly resolve taxpayer issues when they arise
  • $12.4 billion to deliver cutting-edge technology, data and analytics
  • $8.2 billion for workforce training
  • $3.9 billion to support the implementation of the energy tax incentives outlined in the Inflation Reduction Act

In addition to the budget allocations above, the IRS highlighted some of the improvements the public can expect to see in the coming years.

  • The IRS currently provides a customer callback option for 75% of calls to the IRS live assistance toll-free telephone lines. They plan to expand coverage to 95% of taxpayers calling for toll-free live assistance by the end of July 2023.
  • Taxpayers will have access to secure online accounts where they can view account and profile information, make changes, interact with the IRS and manage preferences for payments, refunds and communications.
  • The IRS will expand their capacity in the Office of Chief Counsel and within the Department of the Treasury Office of Tax Policy to address more taxpayer questions proactively.
  • Tax professionals will be able to view status information for their clients, if authorized by the taxpayer.
  • The IRS will send taxpayers notifications about potential issues as they file returns to help them correct errors and claim credits and deductions for which they are eligible.
  • Digital copies of all notices will be added to online accounts so that taxpayers and authorized third parties can view them online.

The IRS’ spending plan will cause significant changes in the tax filing process over the next ten years. This past tax season, we already witnessed some improved efficiencies aimed at improving the taxpayer’s digital experience.

As the IRS unveils more updates, it’s important to stay in the know. With more than 30 years of tax experience, our team works as an extension of your internal team to understand IRS updates and deliver a personalized, professional experience.

We encourage you to schedule a one-on-one call with a tax expert from SST Accountants & Consultants to learn about how we can support your organization’s long-term success.

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