This blog was last updated on June 27, 2021
Many analysts have offered their opinions on what will come of the IRS’ enforcement and assistance abilities as a result of a large budget reduction Congress passed in 2014. Mark Everson, former IRS commissioner, is the latest person to chime in on the issue, noting the effects will extend beyond the 2015 tax season woes cited by other analysts, according to Accounting Today.
After pointing to the problems taxpayers may face due to a lack of assistance from IRS call centers, Everson noted how the budget cuts will present challenges tied to the Affordable Care Act (ACA) and the Foreign Account Tax Compliance Act (FATCA). While the agency is prioritizing enforcement in these areas and doing a great job arranging the necessary systems and software for these laws, problems will likely arise with reduced funding.
Individual ACA reporting will suffer
Everson said many taxpayers will have trouble adjusting to their new tax information reporting obligations under the health care law.
“I think that’s going to gum up the works quite a bit and leave folks who try to do this on their own with some questions,” Everson said. “Some of those can surface in the form of phone calls, which the Service has a hard time getting to.”
Many individuals will turn to their insurers and employers to have their questions answered if they can’t reach anyone at the IRS. While many taxpayers will simply check a box showing they had a qualifying health plan throughout the year, others will have a harder time determining their health insurance details. The aforementioned organizations must be ready to answer questions.
IRS will ramp up FATCA enforcement
Everson noted the international tax law was met with doubts, as many analysts believed foreign governments would not agree to comply. However, there has been overwhelming support, with the IRS expecting more than 145,000 foreign financial institutions (FFIs) to submit data to the IRS this year. Given the current successes, the former commissioner believes the IRS can’t afford to back down on enforcement.
“I think the Service will do its level best to make sure it’s doing an adequate amount in this international arena,” he said. “They may not be able to do as much as they want to, but they’re going to give it a pretty good shot.”
The IRS has held firm to its deadlines on the FATCA timeline following a few delays in the earlier part of the law’s gradual implementation. Even if the budget is tight, the agency clearly is still moving forward with curbing cross-border tax evasion.
