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IRS Audits Suspended in Light of Government Shutdown
Author: Scarinci Hollenbeck, LLC
Date: October 14, 2013
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The Internal Revenue Service is not immune to the far-reaching effects of the government shutdown, and many key services and responsibilities may be delayed or temporarily suspended.
Existing tax law requires that the federal agency continue to collect payments, interest, and penalties, regardless of whether the government is functioning at full capacity. However, those individuals or small businesses that are currently undergoing an audit will receive a reprieve until normal operations resume. Similar to other governing and regulatory bodies, many of the agency’s staff are now furloughed. Of the 94,516 active IRS employees, 87,764 were furloughed during the shutdown with a little more than 8,752 “essential” employees remaining to manage the critical operations, the Huffington Post reports. This is a staff reduction of roughly 90 percent.
However, auditors do not anticipate that the reprieve will last for a long period, so those facing inquiries from the IRS are encouraged to continue working with their certified public accountant, tax attorney, or other professionals to make progress on their case. In fact, Forbes noted that if the shutdown exceeds five days, the agency may be forced to reevaluate its needs to continue collection efforts.
The IRS has faced massive pressure as of late regarding the growing tax gap, which is estimated to be $450 billion. In response, collection efforts have been increased, namely in the form of audits, international agreements to curb offshore tax evasions, stricter reporting requirements, and an expansion of the Offshore Voluntary Disclosure Program. Several Swiss institutions, such as Wegelin & Co., have agreed to pay penalties and fines to the U.S. for helping American account holders skirt reporting requirements and evade tax law. Wegelin, Switzerland’s oldest private banking institution, paid $57 million to the IRS for its complicity in these crimes.
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IRS Audits Suspended in Light of Government Shutdown
Author: Scarinci Hollenbeck, LLC
The Internal Revenue Service is not immune to the far-reaching effects of the government shutdown, and many key services and responsibilities may be delayed or temporarily suspended.
Existing tax law requires that the federal agency continue to collect payments, interest, and penalties, regardless of whether the government is functioning at full capacity. However, those individuals or small businesses that are currently undergoing an audit will receive a reprieve until normal operations resume. Similar to other governing and regulatory bodies, many of the agency’s staff are now furloughed. Of the 94,516 active IRS employees, 87,764 were furloughed during the shutdown with a little more than 8,752 “essential” employees remaining to manage the critical operations, the Huffington Post reports. This is a staff reduction of roughly 90 percent.
However, auditors do not anticipate that the reprieve will last for a long period, so those facing inquiries from the IRS are encouraged to continue working with their certified public accountant, tax attorney, or other professionals to make progress on their case. In fact, Forbes noted that if the shutdown exceeds five days, the agency may be forced to reevaluate its needs to continue collection efforts.
The IRS has faced massive pressure as of late regarding the growing tax gap, which is estimated to be $450 billion. In response, collection efforts have been increased, namely in the form of audits, international agreements to curb offshore tax evasions, stricter reporting requirements, and an expansion of the Offshore Voluntary Disclosure Program. Several Swiss institutions, such as Wegelin & Co., have agreed to pay penalties and fines to the U.S. for helping American account holders skirt reporting requirements and evade tax law. Wegelin, Switzerland’s oldest private banking institution, paid $57 million to the IRS for its complicity in these crimes.