Small-business owners are crucial for driving economic growth in communities throughout the United States. However, their ability to do so is at risk of being hindered by the IRS through audits and onerous actions, potentially causing the engine to stall. With Tax Day approaching, small businesses in America are concerned that despite their efforts to create jobs, raise wages, and bolster their local communities, the government may treat them as if they are suspected of criminal activity.
The recent allocation of almost $80 billion in extra funding to the IRS by the Biden administration and Congress will largely be used for enforcement activities. Main Street requires assistance in comprehending intricate tax laws and should not suffer due to IRS agents scrutinizing every decision made by small businesses.
Small Businesses Face Tax Day
Despite the administration’s reassurance that small businesses will not be the focal point of the substantial new IRS enforcement initiative, business owners remain doubtful. Large businesses and wealthy individuals, with their extensive legal and accounting teams, present a challenging target for IRS agents. On the other hand, small businesses, family-owned businesses, and farms, with their constrained resources, are vulnerable targets for expanded IRS enforcement.
Small business owners are upstanding citizens who diligently pay their taxes on time every year. Rather than presuming that small businesses are engaging in tax evasion, the IRS should prioritize taxpayer education initiatives that provide guidance and support from the government, rather than undue pressure and suspicion.
Considering everything small businesses have done for America, they deserve better treatment. Small businesses have generated almost 13 million net new jobs in the last 25 years, accounting for two-thirds of all job growth in the economy. While large businesses have laid off tens of thousands of employees, small businesses persist in hiring, with many having open job positions that they are unable to fill.
Small business owners are the driving force behind economic growth and job creation in communities throughout the United States. However, this engine may come to a halt if the IRS disrupts its functioning with audits and other cumbersome actions.
Rather than relying on audits and intimidation, Congress should ensure that the IRS concentrates on resolving its extensive backlog. The Treasury Department’s Inspector General’s report indicates that the IRS has over 2 million unprocessed tax returns and more than 400,000 unprocessed pandemic tax credit forms submitted by small businesses, requiring immediate attention.
The Ongoing Wait for Pandemic Relief: Small Businesses
Small businesses have been deprived of critical pandemic relief due to delays caused by the IRS. These businesses were reliant on such support and still face ongoing difficulties arising from the pandemic, such as workforce shortages and inflation. Without a clear timeline for when they will receive the aid they are entitled to, small businesses struggle to plan for their future.
According to federal investigators, the IRS’s primary challenge in 2023 is “enhancing taxpayer service.” However, the agency is not sufficiently addressing this pressing issue. Despite receiving $80 billion over a ten-year period from the administration and Congress, only 4% of the funds were allocated to efficiently resolving taxpayer concerns as they arise.
Small businesses require far more assistance and less hostility from the IRS. In January, the House of Representatives passed a measure to reduce the majority of the $80 billion in enforcement funding while preserving funding for taxpayer services. The Senate and the White House should be open to discussing improvements that would improve the agency’s performance while avoiding impending regulations that will exacerbate small businesses’ already difficult circumstances.
The IRS ought to prioritize education and compliance assistance to enable more small businesses to navigate the complex landscape of tax regulations. Additionally, it should prioritize enhancing taxpayer services over conducting audits and investigations.
Small businesses encounter numerous challenges daily as they strive to remain operational, serve their clients, and contribute to their communities. Therefore, they require greater confidence and assistance from the IRS. They did not require the IRS to obtain an $80 billion bonus that could be utilized to target Main Street.