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: Sen. Braun, Mike [R-IN]
Target Audience
Population: Global taxpayers and recipients of US tax-related payments
Estimated Size: 148000000
- The bill affects the IRS, which is responsible for collecting taxes in the United States. The changes in enforcement authority and reporting requirements directly impact its operations.
- The increase in the gross receipts reporting threshold will impact religious and charitable organizations by lowering their reporting burdens.
- Individuals who benefit from coronavirus recovery funds may be indirectly impacted by the elimination of certain fund-use restrictions.
- Tax return preparers and potentially any individual whose tax information might be accessed improperly will be affected by the increased penalties for unauthorized disclosure.
- The fellowship program will engage the private sector tax experts, impacting individuals working within or associated with such professions.
- Recipients of improper payments to taxpayers will be affected by provisions aimed at reducing these payments.
- There may be indirect consequences for taxpayers due to changes in audit and enforcement practices prompted by the funding restrictions and tax gap requirements.
Reasoning
- The policy is primarily targeting the IRS's operational changes, which affect a broad range of groups, from taxpayers to religious organizations.
- Given the huge population and diversity in demographics, capturing variations in perspectives is crucial.
- The budget restricts widespread physical interventions but allows for structural changes that affect paperwork and procedural efficiencies, impacting psychological wellbeing as bureaucracy may be perceived as less cumbersome for some.
- Indirect impacts can be expected for charitable organizations due to reporting changes, providing relief for administrative overhead and possibly improving their operations.
- Increased penalties for unauthorized disclosures will likely affect tax preparers' operations, possibly causing anxiety about compliance and error management, impacting their wellbeing.
Simulated Interviews
Tax Preparer (New York, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- As a tax preparer, I'm worried about the increased penalties. We already operate under tight scrutiny and this adds more stress.
- The fellowship program seems like it would be good for the IRS but unsure of its direct impact on us.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Retired Accountant (Atlanta, GA)
Age: 63 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- Raising the threshold for reporting is a smart move for charities, it frees up resources to focus on their mission.
- I'm skeptical about the use of AI; I hope it's accurate in estimating the tax gap.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Non-profit manager (Salt Lake City, UT)
Age: 30 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 18/20
Statement of Opinion:
- This is great news for us. The reduced reporting will save us a lot of paperwork.
- More resources can be put toward our services rather than administrative tasks.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 9 | 5 |
Freelance Tax Consultant (Chicago, IL)
Age: 54 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- The changes in focus and fellowship program could bring interesting insights and provide us with new tools.
- Worried about potential increased workload due to more audits being done with AI and tax gap predictions.
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 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Tech Company Executive (San Francisco, CA)
Age: 39 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- I'm glad to see the IRS modernizing with AI, which might reduce the administrative burden at a global operational level.
- It might become easier to plan with clearer projections of the tax gap.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Self-employed online retailer (Austin, TX)
Age: 28 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 16/20
Statement of Opinion:
- It seems like the changes will not directly impact me much, though any simplification in IRS processes is always welcome.
- Concerns about increased penalties make me wary of accounting errors. I have to watch for such changes closely.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 7 | 5 |
University Professor (Boston, MA)
Age: 47 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- The education component of the fellowship program seems promising.
- I wonder how effective AI will be at calculating the tax gap.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Real Estate Investor (Miami, FL)
Age: 60 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 8.0 years
Commonness: 5/20
Statement of Opinion:
- This could be beneficial overall for IRS relations if it leads to more efficiency or clear legislation.
- AI-generated tax gap analysis could also provide a clearer, more predictable tax environment.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 9 | 8 |
College Student (Seattle, WA)
Age: 21 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 4.0 years
Commonness: 20/20
Statement of Opinion:
- It's difficult to understand all the implications, but any move towards reducing improper payments seems good.
- The fellowship sounds like an exciting opportunity. I'm interested in seeing how the IRS modernizes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Small Business Owner (Phoenix, AZ)
Age: 51 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 7.0 years
Commonness: 18/20
Statement of Opinion:
- Raising the reporting threshold is great. It helps businesses focus more on operation rather than just paperwork.
- I'm cautious because reducing enforcement could mean less support in dealing with IRS complexities.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $300000000 (Low: $200000000, High: $400000000)
Year 2: $350000000 (Low: $250000000, High: $450000000)
Year 3: $365000000 (Low: $260000000, High: $470000000)
Year 5: $375000000 (Low: $270000000, High: $480000000)
Year 10: $380000000 (Low: $275000000, High: $490000000)
Year 100: $400000000 (Low: $290000000, High: $510000000)
Key Considerations
- Establishing a fellowship and task force will initially require investment in recruiting, training, and resources, impacting short-term costs.
- The adjusted threshold for religious and charitable organizations could simplify compliance but may slightly impact the oversight on potential abuses.
- The AI investment for gap estimation aims at better long-term IRS efficiency, though initial costs will be non-trivial.
- Restricting audit funding until new gap estimates are available may cause short-term disruptions in enforcement efficiency but aims at long-term compliance improvements.