Inflation Reduction Act Targets Increased Revenue Through IRS Funding, Audits



Signed into law on Aug. 16, 2022, the Inflation Reduction Act includes provisions impacting climate reform and health care, including changes to drug pricing via Medicare, tax credit and tax implications among others. It also provides significant funding to the Internal Revenue Service (IRS) to increase enforcement, create revenue and close the tax gap.

IRS Funding to Increase

Under the Inflation Reduction Act, the IRS is slated to receive $80 billion over the next 10 years. The funds will be used to increase enforcement, improve operational support and modernize business systems. It will also help the agency address other areas in need of attention following a decade of funding cuts and staff shortages.

The bill also calls for a 15% minimum tax on corporations earning $1 billion or more. This is an effort to make multi-national corporations pay more in federal taxes than the limited amounts they are familiar with paying to the IRS.

Extension of the Premium Tax Credit

The Premium Tax Credit (PTC), a provision of the Affordable Care Act (ACA), is extended through 2025 under the Inflation Reduction Act. An eligible individual or family that uses the federal marketplace to purchase health insurance will be able to continue benefitting from enhanced tax credits that translate into lower out-of-pocket costs for health care premiums.

Clean Energy Initiatives

Aside from IRS funding and health care, the law also contains the largest federal clean energy investment in U.S. history worth $300 billion. More than a quarter of the funding is allocated toward renewable energy, including investments in solar panels and wind turbines. A tax credit for businesses and individuals who purchase electric cars is also part of the bill’s clean energy initiative.

For more on the Inflation Reduction Act and additional provisions that could impact business, read the full article here.

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Source: MICPA

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