Politicians are desperately trying to increase revenue without raising taxes. One way to do this is to beef up enforcement of the tax laws already on the books. According to the IRS, the best place to focus these efforts is on small businesses and their tax obligations, specifically their 1099 reporting requirements. The IRS has always had a more difficult time getting money out of the self-employed.
IRS Commissioner, Doug Shulman, recently told a Congressional committee: “the thing you have to remember about the [tax] gap is it’s like a deep shale oil reserve, it’s not money sitting there that’s easily tapped, in many ways we have tapped the easy money… the real answer, the place where we have leverage, is information reporting.”
What this means for the regular taxpayer is that the IRS is going to be furiously ramping up its collection efforts in the coming months. The government seems eager to pour more money into the IRS. According to Commissioner Shulman, each 1 percent improvement in compliance will produce an added $20 billion in revenues. For more details, click here.