Author: Kelly Coughlin, CPA, EveryDayCPA, Inc.; Founder, TaxRxCenter

I want to go over some of the IRS audit soundbites we have heard in the public square from both sides on this increase in the IRS army thing, because there is some good things to learn from them…primarily, to distill what is fact and what is fiction. And to help us assess what the future might look like for individual and business taxpayers and the IRS. Since I am NOT in the tax policy making business, I am going to stay away from weighing in on whether this new legislation is good or bad for the country. But I am happy to weigh on this. The IRS has a lot of broken areas that need to be fixed, especially their three areas of core (in)competency:

1) processing of tax returns and sending out refunds

2) answering the damn phone; and

3) processing correspondence on issues either they or taxpayers or both have identified.

If a good portion of these new funds will get allocated to these three areas of core (in)competency (sorry, I had to poke the bear once more), then this new funding thing might be an okay thing. Here is how I look at it. These three areas with all the technology spend and human resources that are required to improve them will take a significant amount of time and attention and funding. And the more next stage funding we get them to do invest in them, the more attention and funding it will take to complete the job. We just need them to kickstart it. And in no time there will be more and greater needs for attention and funding for these three projects. After all, these are government project initiatives and they will certainly require way more time and capital than they budget; and this means less attention and funding available to pay the army to knock on our doors collecting money from their in-person audits, which by the way, an interesting thing to note is that while in-person audits accounted for only 22% of the total number of audits, in-person audits accounted for 81% of the new taxes. So, if the IRS is knocking on your door, they will get over 80% of the audit revenues from that knock. Lesson learned: Keep the army occupied on their three core defensive strategies and they won’t have resources for expeditionary audit work.