It looks like Congress is going to approve a substantial budget increase for the IRS—some of it to double workers examining small firms and those that are self-employed, according to an IRS official at a recent virtual conference. In a report released on September 2, 2021, the Congressional Budget Office, the Biden administration plans to increase IRS funding by $80 billion over the next decade, which means they would increase revenue by about $200 billion over the same period of time.

Most of the funding — about $60 billion — would go toward IRS enforcement activities.

By 2031, the IRS under this plan would more than double its workforce and have a 90% larger budget, compared to current spending levels. Here in Orange County, we have IRS offices both in Santa Ana and Laguna Niguel.

What the IRS will examine.

Employment taxes. These taxes, the major source of most IRS revenue, will be a major target. The IRS believes many employers owe more than they are paying. Every small business owner requires efficient payroll functions since errors will only create havoc and misunderstanding in the workplace. You may have manual payroll system or you may be using payroll software. Whether it is manual or automated, there are hitches in the whole payroll function that is sometimes quite challenging and complicated and also you need to remember that even if you are using top of the line payroll software’s, common payroll problems still exist that need to be fixed. Another target is taxes and penalties put on the back burner during the pandemic. The IRS will aggressively begin collections on overdue amounts, levying assets and garnishing salaries and other income.