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Budget for IRS Enforcement Activities to Increase

Some months ago we learned that the IRS plans to close a number of walk-in certers (like Santa Rosa, CA) and also reduce the hours for toll-free assitance. The part of the story that was less emphasized is that the funds saved by that action will be directed toward enforcement activities. The planned budget increase is 8%.

  • There will be increased focus on high-income taxpayers.
  • There will be an increase in liens, levies, and seizures.
  • The IRS has been very aggressive in going after tax shelters, as well as the accountants, lawyers, and other shelter promoters involved with questionable shelters. You should expect this to continue or increase. (You can read more about abusive tax schemes and how to avoid them on the IRS web site.)

While all enforcement activities do not lead to criminal charges, certainly some do (especially those illegal tax shelters). In 2004 the IRS referred more than 3,000 cases to theJustice Department for possible criminal prosecution. That is nearly a 20% increase over 2003.

"Tax software is no substitute for tax knowledge."

Any views expressed herein are based on our best information. The content of this web site was written as general information without specific individual information and thus may not apply in all situations. This material was not written, and cannot be used by the taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.

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Janelle Ogg, EA
Richard Ogg, EA