The IRS unveiled a new set of enforcement priorities last month (IR-2023-194), and is targeting the transfer pricing of domestic companies owned by foreign parents, large corporations and high-income individuals. Congress is also pushing the IRS to pursue enforcement, and the Senate Finance Committee has announced a hearing to examine the tax planning of high-income individuals.
The Inflation Reduction Act provided the IRS with an unprecedented $80 billion in supplemental appropriations, with the majority statutorily dedicated toward enforcement. The debt limit agreement earlier this year is set to claw back $20 billion, but the IRS has been steadily rolling out its enforcement priorities for the remaining $60 billion.
The latest release touts several new initiatives, including:
- Inbound transfer pricing: The IRS is sending 150 domestic subsidiaries of foreign parents compliance letters targeting their transfer pricing positions.
- Large corporations: The IRS Large Business and International Division is expanding its large corporate compliance program by using data analytics to open audits for 60 additional large complex corporate taxpayers.
- High-income taxpayers: The IRS is stepping up collection efforts for individual taxpayers with more than $1 million in income and $250,000 in tax debt.
Pressure from Democratic lawmakers could also inform IRS priorities. The Senate Finance Committee hearing scheduled for Nov. 9 could address various planning strategies.
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