No Income Tax Rate Increase Until 2011 But Expect Increased IRS Audits of Tax Returns in Near Future

While Geithner has told Congress that there will be no income tax increases until 2011, his recent proposal to Congress requested additional funding for improved IRS collection operations and increased scrutiny of tax returns.

We’re already seeing the IRS cracking down on both small businessess and individuals with increased tax audits and aggressive collection tactics including bank levies.

Anyone who owes back taxes in this down economy will need to know how to get income tax relief. It’s important to know that there are options for negotiating a tax resolution and be informed so you can avoid becoming a target of aggressive IRS collection efforts, which can financially cripple you for life.

For starters, I recommend filing any tax returns that are due as soon as possible to avoid additional interest, penalties and potential IRS collection tactics, such as a levy on your bank account.

**If you have unfiled tax returns, our specialized staff of attorneys, CPAs, EAs and tax professionals can help. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 866-IRS-PROBLEMS.

CCH (http://tax.cchgroup.com/) reports:

The Obama administration will not ask Congress to raise taxes until 2011, Treasury Secretary Timothy F. Geithner told Congress on May 21. Geithner, testifying before the House Appropriations Subcommittee on General Government and Financial Services, also pledged to improve the IRS’s international tax enforcement activities.

Revenue Raisers

“President Obama has made clear that he will not seek any major revenue increases until 2011, when the (economic) recovery should be firmly in place,” according to Geithner. He added that, once the economy recovers, the federal government must get its “fiscal house in order.” The administration, Geithner said, “will work with Congress to make the tax changes that are necessary to reduce deficits and to do so in a manner that is fair to all Americans.”

The administration has already proposed extending all of the lower individual marginal income tax rates in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) (P.L. 107-16) (TAXDAY, 2009/02/27, W.1; TAXDAY, 2009/02/27, T.2). However, the pre-EGTRRA rates of 36- and 39.6-percent would revive after 2010. The president has also called on Congress to limit itemized deductions for higher-income individuals. At the same time, the president has proposed making permanent several tax incentives targeted to middle income individuals, including the Making Work Pay credit and the American Opportunity tax credit.

IRS Budget

In other news, Geithner asked lawmakers to approve the administration’s fiscal year 2010 budget request for the IRS (TAXDAY 2009/04/20, C.1). Additional funding would enable the IRS to hire 755 employees to increase examinations of tax returns for businesses and higher-income individuals; 300 employees to expand the IRS document matching program; and 491 employees to improve collection operations, Geithner explained.

Treasury Staffing

Geithner also wants to hire more tax professionals at the Treasury Department. He told lawmakers that the Office of Tax Policy’s career staff includes 30 lawyers and 44 economists, as well as support staff, for a total of 93. “This is lower than its usual complement of over 100 professionals.”

The administration aims to increase staffing to 108 positions. “The additional staff is needed to perform analysis and revenue estimates for new policy proposals, conduct research for, among other things, congressionally mandated studies, and develop regulations and guidance for new legislation,” Geithner said. Obama’s nominee for Treasury Assistant Secretary for Tax Policy, Helen Elizabeth Garrett, is awaiting Senate confirmation.

By George L. Yaksick, Jr., CCH News Staff

More Tax Help, IRS News and Tax Relief Tips:

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3 Responses to “No Income Tax Rate Increase Until 2011 But Expect Increased IRS Audits of Tax Returns in Near Future”

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