The IRS is reducing its work force, adding new AI enforcement tools, while the Criminal Investigation division is shifting its resources, agents, and focus from the nearly $700 Billion small-business tax gap enforcement to combating border-related crimes. Without the threat of criminal prosecutions, the behavior of other taxpayers is likely to shift.
While there is much speculation of additional changes in tax policy, this post only addresses the most likely immediate impact of reducing the staffing and shifting existing resources that is already underway.
Winners
- Small business tax cheaters
- Cash-based businesses
- White collar criminals
Losers
- Taxpayers with legitimate defenses and complaints against IRS actions
- Low income taxpayers who take child tax and other credits
- People with income reported from a side gig
- Those with non-income receipts reported on a 1099