The IRS has announced that it is cutting 7000 jobs in 3 centers. Does this mean we are all free of audit concerns now?
Well, like any well crafted business contract you have to read the fine print! The IRS will be reducing its workforce by 7,000 employees through planned layoffs between now and 2024 in its Covington, Kentucky, Fresno, California, and Austin, Texas locations. These positions will be reduced in order to appease the US Congress about IRS budget concerns. Will this reduce enforcement efforts? Audit risks?
Hardly. The reason for the layoffs is the rapid increase in online tax return submission. In 2008 58 percent of American tax returns were submitted electronically. In 2014 that number increased sharply to 86 percent. There are simply fewer people required to process the paper returns. The IRS expects the layoffs to result in a savings of $53 million. What will the IRS do with this money?
“The savings will be “reinvested in taxpayer service, tax enforcement and information technology.”
Advances in information technology have made it easier for the IRS to identify audit trends, discrepancies in tax returns and flag taxpayers for an audit. The increased information technology is also being used to mine data provided to the IRS by international banks, investment houses and sovereign tax authorities relating to US FBAR compliance and FATCA agreements. In other words, it will be easier for the IRS to use automation to identify potential tax cheats, audit targets and those with unreported offshore accounts, assets and income.
The number of standard IRS audits in the US is expected to climb in the next few years. The number of FBAR related audits is expected to skyrocket at any point in the near future as the IRS integrates information provided by offshore agencies with the tax returns submitted by US taxpayers.
Unfortunately, we are not all free of audit concerns as a result of IRS planned layoffs.
If you have been contacted by the IRS for an audit, we invite you to call for a free and substantive consultation at 866-631-3470.
