The Internal Revenue Service (IRS) has recently announced a new policy that will limit the number of audits conducted on households with incomes under $400,000. This is part of an effort to reduce the number of audits conducted on taxpayers in the lower-income brackets.
The policy is intended to focus more of the IRS’s audit resources on those with higher incomes, who are more likely to be able to afford professional tax advice and are more likely to have complex tax returns that require a closer look. The IRS estimates that the policy will result in a reduction of about 40 percent in the number of audits conducted on households with incomes below $400,000.
The policy has been welcomed by many tax professionals, who believe it will reduce the burden on taxpayers and help to ensure that the IRS is focusing its resources on those who are most likely to be evading taxes. It also has the potential to save taxpayers money, as the cost of dealing with an audit can be significant.
However, some have raised concerns that the policy could lead to a decrease in compliance among those with higher incomes, as they may be less likely to be audited. This could lead to an increase in tax avoidance and evasion, which would be detrimental to the overall health of the U.S. economy.
Overall, the policy is a positive step forward in terms of reducing the burden on taxpayers and ensuring that resources are being used effectively. However, it is important to ensure that the policy is implemented in a way that does not lead to an increase in tax avoidance and evasion.