IRS Tax News

IRS launches new initiatives using Inflation Reduction Act funding to ensure large corporations pay taxes owed; continues to improve service and modernize technology with launch of business tax account

IR-2023-194, Oct. 20, 2023

WASHINGTON — Following a dramatically improved 2023 filing season thanks to Inflation Reduction Act (IRA) investments, the Internal Revenue Service has targeted IRA resources on strengthening enforcement, with announcements on new initiatives to pursue high-income, high-wealth individuals who do not pay overdue tax bills and complex partnerships.

Today the IRS announced new initiatives to ensure large corporations pay taxes owed. As these initiatives to improve compliance among high-income individuals, complex partnerships and large corporations ramp up, the IRS is continuing its work to improve customer service and modernize core technology infrastructure, most notably with the launch of business tax account.

Ensuring large corporations and high-income, high-wealth individual taxpayers pay taxes owed

The IRS is working to ensure large corporate and high-income individual filers pay the taxes they owe. Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented the 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.

  • Large foreign-owned corporations transfer pricing initiative: The IRS is increasing compliance efforts on the U.S. subsidiaries of foreign companies that distribute goods in the U.S. and do not pay their fair share of tax on the profit they earn of their U.S. activity. These foreign companies report losses or exceedingly low margins year after year through the improper use of transfer pricing to avoid reporting an appropriate amount of U.S. profits. To crack down on this strategy, the IRS is sending compliance alerts to approximately 150 subsidiaries of large foreign corporations to reiterate their U.S. tax obligations and incentivize self-correction.
  • Expansion of the Large Corporate Compliance program: The IRS' Large Business & International Division's (LB&I) Large Corporate Compliance (LCC) program focuses on noncompliance by using data analytics to identify large corporate taxpayers for audit. LCC includes the largest and most complex corporate taxpayers with average assets of more than $24 billion and average taxable income of approximately $526 million per year. As new accountants come on board in early 2024, LB&I is expanding the program by starting an additional 60 audits of the largest corporate taxpayers selected using a combination of artificial intelligence and subject matter expertise in areas such as cross-border issues and corporate planning and transactions.
  • Cracking down on abuse of repealed corporate tax break: Following the 2017 repeal of a provision of the code that provided a deduction for producing goods in the U.S., the IRS received hundreds of claims collectively seeking more than $6 billion in refunds, with a significant portion of filers claiming the deduction for the first time. The IRS launched a campaign to address noncompliance and review high-risk claims in this area. IRS efforts have been incredibly successful in ensuring revenue is collected. The efforts have recently been supported by a significant win in the Tenth Circuit Court of Appeals, which sided with the Tax Court and IRS in denying a refund claim based on a $1.8 billion deduction. This will have far-reaching benefits to the IRS' ongoing efforts in this space.
  • Prioritization of high-income cases: The IRS has been ramping up efforts to pursue high-income, high-wealth individuals who have either not filed their taxes or failed to pay recognized tax debt. These efforts are concentrated among taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. Building off earlier successes that collected $38 million from more than 175 high-income earners, dozens of revenue officers are focusing on these high-end collection cases in the coming fiscal year. As announced in September, the IRS has begun contacting about 1,600 new taxpayers in this category that owe hundreds of millions of dollars in taxes.
    • The IRS has now collected $122 million dollars in 100 of these already assigned 1,600 cases. Examples of cases closed since the Inflation Reduction Act passed follow:
      • An individual last month was ordered to pay more than $15 million in restitution. The individual falsified millions of dollars of personal expenses as deductible business expenses and financed construction of a 51,000-square-foot mansion, including expenses of interior and exterior construction costs; an outdoor pool and pool house; and tennis, basketball and bocce courts. The individual falsified millions of dollars of expenses for luxury vehicles, artwork, country club memberships and homes for his children.

      • An individual last week pled guilty to filing false tax returns and skimming more than $670,000 from his business. The individual spent $110,000 on personal expenses and $502,000 on gambling.

      • An individual was sentenced to 54 months in federal prison for fraudulently obtaining $5 million in COVID relief loans for sham businesses. The individual then spent the money on himself, purchasing Ferrari, Bentley and Lamborghini cars.

Improving taxpayer service

The IRS is focused on helping taxpayers get it right the first time — claiming the credits and deductions for which they're eligible 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.

The IRS is expanding in-person service and meeting taxpayers where they are, particularly those in underserved and rural communities. The IRS is continuing to expand Taxpayer Assistance Centers across the country while also starting a special series of events to help taxpayers living in areas far from the agency's in-person offices.

  • Community Assistance Visits: In these new Community Assistance Visits, the IRS will set up a temporary Taxpayer Assistance Center to give taxpayers from hard-to-reach areas an opportunity to meet face-to-face with IRS customer service representatives. The IRS has conducted seven events in Paris, Texas; Alpena, Michigan; Hastings, Nebraska; Twin Falls, Idaho; Juneau, Alaska; Lihue, Hawaii; and Baker City, Oregon. Many of the taxpayers served at these events had exhausted all other options for IRS services. The feedback from IRS employees, taxpayers and the host sites have all been very positive. Currently, two additional locations have been identified to host Community Assistance Visits in Ciales, Puerto Rico and Gallup, New Mexico.
  • Opening Taxpayer Assistance Centers: Currently, the IRS has opened or reopened the following 50 Taxpayer Assistance Centers since the passage of the Inflation Reduction Act, including eight additional centers since the first anniversary of the law's enactment:
Taxpayer Assistance Center Date opened/reopened 
Waco, Texas Oct. 10, 2023
Missoula, Montana Oct. 2, 2023
Martinsburg, West Virginia Oct. 2, 2023
Monroe, Louisiana Sept. 25, 2023
York, Pennsylvania Sept. 18, 2023
Topeka, Kansas Sept. 5, 2023
Utica, New York Aug. 28, 2023
Fayetteville, Arkansas Aug. 14, 2023
Hickory, North Carolina Aug. 7, 2023
Rome, Georgia Aug. 7, 2023
Plantation, Florida Aug. 3, 2023
Panama City, Florida July 31, 2023
Cranberry Township, Pennsylvania July 31, 2023
Peoria, Illinois July 24, 2023
Huntington, West Virginia July 5, 2023
Lincoln, Nebraska May 23, 2023
La Vale, Maryland May 15, 2023
Altoona, Pennsylvania May 8, 2023
Fredericksburg, Virginia May 1, 2023
Parkersburg, West Virginia May 1, 2023
Bend, Oregon April 17, 2023
Greenville, Mississippi April 10, 2023
Trenton, New Jersey April 10, 2023
Bellingham, Washington April 3, 2023
Augusta, Maine March 30, 2023
Jackson, Tennessee March 28, 2023
Joplin, Missouri March 28, 2023
Colorado Springs, Colorado March 27, 2023
Glendale, Arizona March 27, 2023
Cranberry Township, Pennsylvania March 22, 2023
La Crosse, Wisconsin March 20, 2023
Charlottesville, Virginia March 17, 2023
Queensbury, New York March 9, 2023
Santa Fe, New Mexico Feb. 27, 2023
Longview, Texas Jan. 17, 2023
Overland Park, Kansas Jan. 17, 2023
West Nyack, New York Jan. 5, 2023
Binghamton, New York Jan. 3, 2023
Casper, Wyoming Jan. 3, 2023
Fort Myers, Florida Dec. 19, 2022
Grand Junction, Colorado Dec. 19, 2022
Rockford, Illinois Dec. 12, 2022
Hagerstown, Maryland Dec. 1, 2022
DASE (Guaynabo), Puerto Rico Nov. 28, 2022
Johnson City, Tennessee Nov. 28, 2022
Prestonsburg, Kentucky Nov. 28, 2022
Vienna, Virginia Nov. 28, 2022
Greensboro, North Carolina Nov. 22, 2022
Bloomington, Illinois Nov. 21, 2022
Ponce, Puerto Rico Nov. 14, 2022
  • Subscribe to our newsletter

  • Pin It on Pinterest

    Call Now Button