Written on behalf of Feigenbaum Consulting
Earlier this year, Congress earmarked $320 million of the Internal Revenue Service’s (IRS) total $11.4 billion budget for implementing the reforms resulting from one of the largest overhauls of the U.S. tax code in many years. A recently disclosed document reveals that the IRS will spend almost $300 million to carry out necessary changes.
In March 2018, Treasury Secretary Steve Mnuchin had urged lawmakers to provide the IRS with additional funding in order to assist in the implementation of the new tax reform. Mnuchin was quoted as saying:
It is one of my top priorities, making sure we implement the tax plan, which impacts literally everything at the IRS, from customer service, to forms, to technology. That’s what is so important that we get the additional funding for it
The IRS had previously seen its budget cut by almost $1 billion since 2010, with more than 17,000 employees departing the agency. Based on President Trump’s initial budget request for 2019, the Service would have been a further $100 million decrease in overall funding.
In late March 2018, Congress introduced the omnibus spending bill that, among other things, provided the IRS with the necessary funding to implement the tax changes. The bill also includes several provisions intended to provide oversight of the IRS.
The money will be available to the IRS until September 30, 2019. Receipt of the funding was contingent upon the Service submitting a detailed spending plan to Congress.
Details of the Planned Spending
According to the spending plan, IT and other operations will use more than 90% of the total funds. The IRS is planning to:
- update 140 computer systems to assist it in implementing the new legislation;
- revise 450 publications and forms;
- carry out 40,000 hours of training;
- prepare for a 17% increase in phone calls.
In addition, $7.5 million has been set aside to assist the chief counsel’s office, including funding for lawyers to draft regulations and provide published guidance.
The IRS estimates that it will require more than 540 additional hours of work to modify its existing systems, establish new workflows, integrate services, manage programs, and plan overall. It also plans to conduct outreach to help prepare taxpayers, entrepreneurs, and small business owners about the new tax rules. The Service generally organizes more than 1000 such outreach events annually to educate the public, which will significantly increase in the wake of the tax changes.
We will continue to follow further developments with respect to U.S. tax reform. In the meantime, if you have questions about personal or corporate tax planning, and how it may be affected by the new legislation, contact Feigenbaum Law. We offer customized tax and financial planning solutions to clients in the U.S., Canada, and around the globe. Contact us online or at (905) 695-1269 or toll-free at (877) 275-4792 to learn about how we can help with cross-border tax planning.