Are you ready for the IRS to come knocking at your door, or at least send you a letter?

On August 16, 2022, President Biden signed the Inflation Reduction Act, commonly referred to as the “IRA”, into law. In addition to a bunch of other things, it authorized the funding of $80 BILLION for the IRS over the next ten years. Over half of the $80 billion, or approximately $45 billion is earmarked for enforcement. So, what does that mean for you? Well, it means that the IRS is looking to close the “tax gap” which is the difference between what Americans really owe and what they actually pay. Simple mistakes by using the wrong form or even not filling out the form could change a tax return by just a few dollars but, the penalties could literally kill you. Let’s take for example poor Monica Toth. She prepared her own taxes from forms that she got at the local public library however, she did not know that she had to also file an FBAR form for a Swiss bank account her Father left her in 1999. When this was all discovered, Ms. Toth tried to correct everything herself and she did pay the $ 40,000 of tax that was due. The IRS thanked her for getting every corrected and then sent her a bill for $ 2.2 million in penalties for the late filing of the return. Or you could be like Police Officer Krzysztof Wrzesinski of Philadelphia who received a gift over a two year period of $ 830,000 from his Mother in Poland. Gifts themselves are not taxable to the receiver however, in this case Officer Wrzesinski failed to file a Form 3520 reporting a gift from abroad and he was presented a bill from the IRS for a mere $ 1.5 BILLION. The moral of this whole story is, there are going to be more auditors hired over the next ten years and the Tax Code is very complicated with many hidden land mines so, make sure you get good professional tax assistance and advice before the filing of your returns.