Small business owners are the engine of economic growth for communities across America. Yet the engine risks stalling if the IRS puts a wrench in the gears with audits and heavy-handed actions.
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As Tax Day approaches on Tuesday, America’s small businesses worry that their own government will treat them like suspected criminals, even as they hire workers, raise wages and strengthen their communities.
The Biden administration and Congress recently gave the IRS nearly $80 billion in additional funding over 10 years. Most of that funding is directed towards implementation activities.
Main Street needs help understanding complex tax laws. There’s no need to be bothered by IRS agents questioning every small business move.
The administration insists that small businesses won’t be the target of this massive new IRS enforcement focus, but business owners are skeptical. Big businesses and the wealthy, with their armies of lawyers and accountants, make a tough target for IRS agents. Meanwhile, small businesses, farms and family-owned businesses, with limited resources, are the low-hanging fruit for expanded IRS enforcement.
Small businesses drive job creation
Small business owners are law-abiding citizens who pay their taxes, on time, every year. Instead of assuming that small businesses are cheating on their taxes, the IRS should focus on taxpayer education efforts to ensure that they have help and guidance from their government instead of pressure and suspicion.
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Small businesses deserve better, after all they’ve done for America. They have created nearly 13 million new jobs in the last 25 years, accounting for 2 out of every 3 jobs added to the economy. While big businesses are laying off thousands of people, small businesses continue to hire — and many have job openings they can’t fill.
Small business owners are the engine of economic growth and job creation for communities across America. Yet the engine risks stalling if the IRS puts a wrench in the gears with audits and heavy-handed actions.
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Instead of audits and intimidation, Congress should ensure that the IRS prioritizes clearing its massive backlog. According to a report from the Treasury Department’s Inspector General, the IRS has more than 2 million unprocessed tax returns and more than 400,000 unprocessed small business pandemic tax credit forms. .
Small businesses are still waiting for pandemic relief
The IRS is preventing small businesses from receiving major pandemic relief in a timely manner. Small business owners are counting on these benefits and continue to face the challenges that started the pandemic, such as inflation and lack of workers. It is difficult for small businesses to plan for their future if they do not know when they will get the relief they are owed.
Federal investigators say that “improving taxpayer service” is the main challenge facing the IRS in 2023. But the IRS is not adequately dealing with this huge and urgent issue. When the administration and Congress gave the agency $80 billion over the decade, they directed only 4% of the money to quickly resolve taxpayer issues when they arose.
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Small businesses need more of that — and a lot less antagonism. In January, the House of Representatives voted to restore most of the $80 billion in additional enforcement funding while maintaining taxpayer funding of the service. The Senate and the White House should be willing to talk about reforms that will help the agency work better, while also preventing future orders that will make it harder for small businesses to survive.
The IRS should focus on education and compliance assistance so that more small businesses know how to navigate the labyrinth of tax rules. And it should promote the improvement of service to the taxpayer in audits and investigations.
Small businesses face obstacles every day to keep their doors open, serve their customers and strengthen their communities. They need more assurance and support from the IRS. They don’t need the IRS to get an $80 billion bonus to use to target Main Street.
Brad Close is the president of the National Federation of Independent Business.