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Inflation Reduction Act boosts IRS funding for enforcement and modernization

Photographic portrait of Bryon Christensen
Bryon Christensen

Principal, Tax Controversy, Ernst & Young LLP

3 minute read 25 Aug 2022
Related topics
Tax

Over half of the funding is designated for enforcement.

The Inflation Reduction Act of 2022 (IRA) increases IRS enforcement funding by $80b over the next 10 years. The funds are expected to generate $204b in additional revenue, with a net of $142b, that will partially finance $430 billion in climate, energy and healthcare provisions.

How EY can help

Under the IRA, the increased funding will be allocated as follows:

  • $45.6b for enforcement, which includes examinations, collections, criminal investigations, legal and litigation support, and digital asset monitoring.
  • $25.3b for operations support, including legacy information technology systems and telecommunications.
  • $4.8b for business systems modernization, including technology to improve customer service.
  • $3.2b for taxpayer services, including pre-filing assistance and education, filing and account services, and funding for the Taxpayer Advocate Service.

The additional funding will likely result in more audits of high-wealth and high-income individuals, as well as complex partnerships and large corporations, but an increase in those audits may not be immediate.

Summary

The IRS is expected to release plans for hiring and training new employees across the organization, including enforcement personnel, customer service representatives, IT specialists, and other positions.

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About this article

Photographic portrait of Bryon Christensen
Bryon Christensen
Principal, Tax Controversy, Ernst & Young LLP
Brings a depth of experience to any controversy. Focuses on your long-term priorities.
Related topics
Tax

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.