Bill Overview
Title: Simplify, Don’t Amplify the IRS Act
Description: This bill limits Internal Revenue Service (IRS) enforcement authority and modifies certain IRS reporting requirements. It also eliminates certain restrictions on the use of coronavirus recovery funds. Among other provisions, the bill increases the gross receipts reporting threshold for certain religious and charitable organizations from $5,000 to $50,000; generally increases penalties for unauthorized disclosure of taxpayer information and for such disclosures by tax return preparers; requires the IRS to establish a fellowship program to recruit private sector tax experts to create a task force to, among other things, educate IRS employees on emerging issues, perform audits, and address offshore tax evasion; and sets forth provisions for reducing improper payments to taxpayers. The bill also requires the IRS to report annually on the tax gap estimate for the most recent taxable year. The IRS must use artificial intelligence to calculate an estimate of the tax gap. The bill defines tax gap as the difference between tax liabilities owed to the United States and those liabilities actually collected. The bill restricts funding for IRS audits and enforcement until the IRS publishes an updated tax gap projection.
Sponsors: Rep. Rice, Tom [R-SC-7]
Target Audience
Population: Taxpayers, tax professionals, and smaller religious and charitable organizations
Estimated Size: 158000000
- The bill affects taxpayers in the United States by potentially reducing or delaying IRS enforcement due to restricted funding until a tax gap projection is developed.
- Religious and charitable organizations in the United States will be affected by the changes in gross receipt reporting requirements, impacting smaller organizations primarily.
- Tax professionals and private sector tax experts may be indirectly affected by the opportunity to participate in the IRS fellowship program, impacting their career opportunities.
- Penalization changes for unauthorized disclosure of taxpayer information affects tax professionals, IRS employees, and taxpayers whose data is protected under these laws.
- Fellowship program may impact IRS employees by exposing them to new private-sector methods and emerging issues.
Reasoning
- The target population includes millions of Americans who are individual taxpayers, tax professionals, and smaller religious and charitable organizations. While not everyone will be directly impacted, the potential changes in IRS enforcement could create significant ripple effects in these populations.
- Given the $50,000,000 USD budget cap in year 1, the policy likely can't affect a large number directly. However, the indirect effects through changes in IRS behavior might affect a larger group. Thus, I've included a mix of directly and indirectly impacted individuals.
- Many people expect tax relief or changes in how tax audits and enhancements occur. However, the actual impact might depend heavily on how the IRS reallocates resources and manages backlog within its new constraints.
- The fellowship program suggests some potential for shifts in the tax profession as new collaborations could bring private industry perspectives into the IRS, affecting career paths for involved individuals.
- Religious and charitable organizations could experience minor to moderate impact due to the increased thresholds for gross receipts reporting, potentially allowing for more financial flexibility without intense reporting. However, larger institutions might not feel these changes.
Simulated Interviews
Non-profit Accountant (Brooklyn, NY)
Age: 32 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- The increase in the reporting threshold helps small charities like us focus more on our missions rather than extensive paperwork.
- I'm hopeful that the penalties for unauthorized data disclosure will bring more security when dealing with tax preparers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Tax Consultant (Austin, TX)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 8/20
Statement of Opinion:
- The fellowship program provides a great opportunity to gain insights into IRS operations and impacts my career positively.
- The changes in enforcement might initially increase workloads due to uncertainty, but should stabilize.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Retired Nurse (Orlando, FL)
Age: 60 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 10/20
Statement of Opinion:
- I'm concerned that reduced IRS enforcement means fewer resources to help with taxpayer questions.
- Any delay in addressing tax evasion affects the fairness of the system.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 4 | 3 |
| Year 20 | 3 | 3 |
Freelance Software Developer (San Francisco, CA)
Age: 28 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- Increased penalties for data breaches sound comforting; I've always been wary of who handles my tax information.
- I worry about IRS delays affecting my tax returns.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 4 |
Public-School Teacher (Columbus, OH)
Age: 39 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 1.0 years
Commonness: 9/20
Statement of Opinion:
- Balanced audits are key, though funding cuts could weaken taxpayer compliance and fairness.
- I'm not directly impacted but expect indirect benefits if the tax system becomes more efficient.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
IRS Auditor (Denver, CO)
Age: 51 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 3/20
Statement of Opinion:
- The changes might boost efficiency if handled correctly, but concerns remain about practice changes causing chaos.
- Potential job shifts due to funding limits and new methodologies are worrisome.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 5 |
CPA (Seattle, WA)
Age: 41 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 4/20
Statement of Opinion:
- Simplification in reporting for nonprofits aids my clients significantly.
- I'm interested in how the increased penalties will influence data privacy and shared responsibility.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Tax Attorney (Salt Lake City, UT)
Age: 35 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 6/20
Statement of Opinion:
- Altered IRS methodologies impact how I plan for clients.
- Increased opportunities for errors—a legal minefield I need to navigate cautiously.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 5 |
Small Business Owner (Rural Missouri)
Age: 30 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 1.0 years
Commonness: 12/20
Statement of Opinion:
- IRS changes rarely hit small fish directly, but less auditing means less pressure for precision.
- Improper funds collection concerns me. Who loses out if errors increase?
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 4 | 4 |
| Year 20 | 4 | 4 |
Pastor (Atlanta, GA)
Age: 55 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 3/20
Statement of Opinion:
- Less reporting means more time for religious activities and community engagement.
- Rules over data handling and penalties seem tighter—hopefully it's towards traveler protections.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 4 |
Cost Estimates
Year 1: $50000000 (Low: $40000000, High: $60000000)
Year 2: $30000000 (Low: $20000000, High: $40000000)
Year 3: $30000000 (Low: $20000000, High: $40000000)
Year 5: $30000000 (Low: $20000000, High: $40000000)
Year 10: $50000000 (Low: $40000000, High: $60000000)
Year 100: $50000000 (Low: $40000000, High: $60000000)
Key Considerations
- The bill involves changes to IRS operations that could have varied impacts on compliance and revenue.
- Gross receipt reporting thresholds could affect the simplicity and accuracy of revenue tracking for the IRS.
- The whole-scale application of AI in calculating the tax gap is novel, and uncertainties remain concerning its outcomes.