On May 11, 2019, the IRS Commissioner Chuck Rettig stated that the IRS is rapidly increasing the number of agents in certain divisions. US international tax compliance is the primary target of this 2019 IRS hiring spree.
2019 IRS Hiring Spree: Affected IRS Divisions
The Commissioner announced this news while speaking at the American Bar Association’s Section of Taxation conference in Washington, D.C. He stated that the Large Business and International (“LB&I), Small Business/Self-Employed (“SB/SE”) and Criminal Investigation (“CI”) divisions are the ones that form the core of the 2019 IRS hiring spree. Additionally, the Office of Chief Counsel and the Modernization and Information Technology Division are also beefing up their staff.
2019 IRS Hiring Spree: Why the IRS is Hiring New Agents
The Commissioner expressly mentioned two reasons for the 2019 IRS hiring spree – reducing the tax gap and assuring international compliance. Interestingly, he also mentioned that he will not allow the illegal tax shelter scandals, like the ones that happened in the 1980s, 1990s and 2000s, to happen on his watch.
The Commissioner went on to identify certain problematic areas where he wants the new hires to focus. He specifically listed: digital economy, transfer pricing, syndicated conservation easements, employment tax and cash-intensive businesses.
Finally, the Commissioner stated that he wants to expand the IRS message to the taxpayers who speak English as a second language. He said: “I’m from Los Angeles. In the grocery store in line there are more than six languages being spoken. This is 2019. We need to have our information available to every American trying to get it right.” He also shared that he was surprised when he found out that the IRS printed tax returns in only six languages.
The Commissioner emphasized that the IRS should not just print the returns in more languages, but also to provide IRS guidance in more languages. Also, he stated that the quality of translation services can be further improved. Undoubtedly, this will be the job of some of the new hires.
2019 IRS Hiring Spree: Consequences for Noncompliant Taxpayers with Foreign Assets and Foreign Income
The new IRS hiring spree means that there will be more audits and investigations of noncompliant taxpayers, including those who own foreign assets and receive foreign income. The fact that the Commissioner specifically mentioned illegal tax shelters and international tax compliance is a direct confirmation that taxpayers with offshore assets will soon be at an even higher risk of the IRS discovery of their tax noncompliance.
Furthermore, with more agents available, the IRS can expand the scope of its international tax audits. We can anticipate that there will be more audits with respect to Forms 3520/3520A (owners and beneficiaries of foreign trusts), 5471 (owners of a foreign corporation), 8621 (PFICs) and 8865 (owners of an ownership interest in a foreign partnership).
The IRS will also able to better utilize the piles of data it receives from foreign financial institutions under the Foreign Account Tax Compliance Act (“FATCA”) and bilateral automatic information exchange treaties. In other words, the IRS will be able to identify more noncompliant taxpayers.
Contact Sherayzen Law Office for Professional Help With Your Undisclosed Foreign Assets and Foreign Income
If you have undisclosed foreign assets and foreign income, you need to contact Sherayzen Law Office for professional help as soon as possible. Within just a few months, the IRS ability to locate you will expand much further than ever. If the IRS audits you or even just commences an investigation of your foreign assets, you may not be able to utilize the offshore voluntary disclosure options to reduce your FBAR and other IRS penalties.