Building on filing season 2023 success, IRS continues to improve service, pursue high-income individuals evading taxes, modernize technology. Improving taxpayer service
The IRS is focused on helping taxpayers get it right the first time — claiming the credits and deductions they are eligible for and avoiding back-and-forth with the agency when errors arise. To help taxpayers get it right, the IRS is working toward taxpayers being able to seamlessly interact with the agency in the ways that work best for them on the phone, in-person and online. IRS is expanding in-person service and meeting taxpayers where they are, particularly those in underserved and rural communities. IRS is continuing to expand Taxpayer Assistance Centers (TACs) across the country, while also starting a special series of events to help taxpayers living in areas not close to the agency’s in-person offices.
Community Assistance Visits: In these new Community Assistance Visits, IRS will set up a temporary Taxpayer Assistance Center to give taxpayers from underserved areas an opportunity to meet face-to-face with IRS customer service representatives. IRS conducted the first event last month in Paris, Texas in partnership with the United Way and has plans to hold similar events in more states. Currently, seven additional locations have been determined in Alpena, Michigan; Hastings, Nebraska; Twin Falls, Idaho; Juneau, Alaska; Lihue, Hawaii; Baker City, Oregon; and Gallup, New Mexico.
Opening Taxpayer Assistance Centers: Currently, the IRS has opened or reopened 35 Taxpayer Assistance Centers since the passage of the Inflation Reduction Act.
Ensuring high-income taxpayers pay taxes owed:
The IRS is working to ensure hold high-income filers pay the taxes they owe. Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented IRS from keeping pace with the increasingly complicated set of tools that the wealthiest taxpayers use to hide their income and evade paying their share. The IRS is now taking swift and aggressive action to close this gap.
Making delinquent millionaires pay up. In just the last few months, we closed about 175 delinquent tax cases for millionaires, generating $38 million in recoveries. This is just the start. We will continue to go after delinquent millionaires as we ramp up enforcement capabilities through the IRA.
Pursuing tax-evading millionaires. In recent months, our Criminal Investigation team has closed a lengthy list of cases where wealthy taxpayers have been sentenced for tax evasion, money laundering and filing false tax returns. Instead of paying taxes, these evaders spent money owed to the government on gambling at casinos, vacations and the purchase of luxury goods. For example, in one case alone the person was ordered to pay more than $6 million in restitution. In addition to this, there are other highlights:
High-dollar scheme in Puerto Rico. We recently identified about 100 high-income individuals claiming benefits in Puerto Rico without meeting the residence and source rules involving U.S. possessions. These wealthy individuals are attempting to avoid U.S. taxation on U.S. source income, and we expect many of these cases to proceed to criminal investigation.
Pension arrangements in Malta. As part of our effort to go after unlawful offshore tactics, IRS and Treasury issued proposed rules in June that define Maltese personal retirement schemes used to avoid U.S. taxes as listed transactions. We are already working to identify taxpayers that are improperly using Malta-U.S. Treaty rules to improperly claim exemptions. The IRA will enable us to forcefully find tax avoiders who leverage these offshore schemes.
Cracking down on millionaire non-filers. The IRS continues to intensify work around wealthy individuals who do not file tax returns. These are particularly egregious cases where instead of filing their taxes and paying their fair share, these people used the money to make lavish purchases. In one recently closed case, an individual used funds owed to the government to buy a Maserati and a Bentley. We will continue to work with our law enforcement partners to hold these individuals accountable.
Modernizing technology
On the technology side, IRS is modernizing decades-old technology to drive the agency’s efforts to provide world class customer service and protect taxpayers’ data.
Mail-Sorting Machines: IRS is in the process of replacing decades-old mail sorting machines. These new machines will allow the IRS to quickly open and prepare mail for processing, which will result in the IRS processing paper returns and delivering refunds more quickly. The IRS plans to replace at least six mail sorting machines in Kansas City, Ogden, and Austin locations.
Scanners: The IRS will replace 205 old scanners to improve its ability to quickly process the volume of incoming paper. All told, 698 modernized scanners are funded. These include high capacity, desktop, and handheld scanners so that IRS employees can use them in various situations.
Digitization: The IRS also continues to make significant progress scanning and e-filing paper returns. As of filing season, the IRS had scanned about 480,000 forms—470,000 Forms 940 and 10,000 Forms 1040 and 941. In the three months since filing season, the IRS has scanned more than 250,000 additional forms. IRS has now scanned about 484,000 Forms 940, 210,000 Forms 941, and 38,000 Forms 1040. Digitization has far-reaching implications for how the IRS can improve service. IRS is currently testing a mobile application prototype, Inform Me, built with the capability to scan a paper IRS form, notice, or other document. The app will recognize the document and pull up related information and guidance on IRS.gov to help taxpayers get their questions answered and get it right. The app is currently undergoing user testing with IRS’ industry partners and at this summer’s Nationwide Tax Forums. After this user testing is complete, IRS will determine the timeframe for full deployment.