News & Updates

July 20, 2021
Certified Public Accountants and Consultants
Increased Tax Audits are on the Horizon
On May 28, 2021, Biden announced his plans to seek $6 trillion in federal spending for the 2022 fiscal year to invest in the country’s deteriorating infrastructure and economic reform. With ongoing negotiations in Congress over how to fully fund Biden’s massive infrastructure and tax proposals, Biden has addressed his priority in investing roughly $40 billion dollars to boost the IRS enforcement budget. With hopes to shrink the nation’s economic deficits, law makers planned to revamp the Internal Revenue Service to begin strengthening the administrations enforcement on compliance activity such as increased audit examinations and tax collections to regain an additional $140 billion in revenue from unpaid taxes resulting in a net gain of $100 billion dollars over 10 years. But, as of Sunday, July 18th, these plans came to a huge halt as Republican Senators rejected the proposal to fund any additional money towards the IRS. Meanwhile, Democrats are already planning to include this high priority proposal in a separate reconciliation package. 

According to the 2020 Congressional Budget Office report, the amount of individual returns the IRS has examined has dropped by 46 percent from 2010 to 2018. Additionally, examinations of corporate tax returns have fallen by 37 percent. With severe IRS budget cuts having transpired in the past decade along with the strain of the coronavirus pandemic within the past year, the IRS has been forced to adapt to a more hybrid work environment, resulting in a reduction of available staff to perform such audit examinations and collections efforts to gather outstanding taxes owed. With high hopes from the Biden Administration to push these proposals forward, many U.S. taxpayers and business owners alike could begin witnessing an increase in IRS audits in the near future if these proposals come to fruition.
What you should do if you get audited.

Although the selection for an audit does not always suggest there is a major problem, dealing with an IRS examination is not always a pleasant experience to encounter. If audited, a taxpayer must be prepared to provide the needed documentation required to successfully complete the audit. Taxpayers should keep clear records of income, deductions, credits, expenses, and other financial information to help the audit run smoothly. The law requires taxpayers to keep all records used for return preparation at least 3 years. Maintaining current bookkeeping and tax documentation helps with filing efficient yearly returns which could lessen the chances of triggering an IRS audit. Furthermore, having the proper representation to help assist with an audit can be extremely useful in gathering the appropriate documentation needed to complete a successful audit. An experienced CPA will not only help prepare the records needed for the audit, but also represent the taxpayer with the examination process and guide them in the right direction.

How we can help!

We at Griffing & Company, P.C. strive to provide the best services and representation needed for our clients. Let us help you with all of your tax and IRS needs today! Contact our office to speak with one of our knowledgeable staff members.  
One Sugar Creek Center Blvd., Suite 650
Sugar Land, TX 77478
(281) 491-8866 Fax (281) 491-8998