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The IRS is Updating its Core Technology Infrastructure to Collect Taxes

The IRS has kicked off new initiatives, funded by the Inflation Reduction Act, to ensure that big corporations pay their fair share of taxes. After a successful 2023 filing season, the IRS is now directing resources toward strengthening enforcement, with a focus on pursuing high-income individuals and complex partnerships with overdue tax bills. 

In a recent announcement, the IRS outlined its efforts to ensure large corporations meet their tax obligations. As these initiatives target high-income individuals, complex partnerships, and big corporations, the IRS is also working on enhancing customer service and updating its core technology infrastructure, including introducing the business tax account. 

The IRS is determined to ensure that large corporations and high-income individuals pay the taxes they owe. Budget cuts in previous years had hindered the IRS from keeping up with the sophisticated methods used by wealthy taxpayers to hide income. With the Inflation Reduction Act in place, the IRS is now taking swift action to address this gap. 

The new initiatives include: 

Large foreign-owned corporations transfer pricing initiative: Targeting U.S. subsidiaries of foreign companies that avoid paying their fair share of U.S. taxes through improper transfer pricing. 

Expansion of the Large Corporate Compliance program: Using data analytics to identify and audit large corporate taxpayers. 

Cracking down on abuse of repealed corporate tax break: Addressing noncompliance after the repeal of a tax provision and denying refund claims. 

Prioritization of high-income cases: Intensifying efforts to pursue high-income individuals with significant tax debts. 

The IRS has already successfully collected millions from high-income earners who had evaded taxes. For example, individuals have been ordered to pay restitution for falsifying business expenses, skimming money from their businesses, or fraudulently obtaining COVID relief loans. 

In addition to enforcement, the IRS is also working on improving taxpayer service. This includes expanding in-person services and setting up temporary Taxpayer Assistance Centers in underserved areas. The IRS has opened or reopened 50 Taxpayer Assistance Centers since the passage of the Inflation Reduction Act, with plans for further expansion. 

On the technology front, the IRS is modernizing its systems to provide better customer service and protect taxpayer data. This includes the launch of the business tax account, allowing business taxpayers to manage their tax-related activities online, document upload tool for response to IRS tax notices and letters, and exploring the creation of an e-file system run by the IRS. The IRS is also making progress in digitizing paper returns to speed up processing and improve data accuracy for customer service. 

Overall, the IRS is committed to a dual approach of enforcement and service improvement to ensure tax compliance and providing a better experience for taxpayers.