If someone whose life’s work helps small companies to navigate the complex tax system of our country, I am first -hand seen how the Internal Revenue Service has become a great force that is too often focused on that the least equipped to fight back. Although the agency has long claimed that his enforcement efforts are aimed at large companies and the ultra-rich, the truth is that small companies and middle-class families are the victims of its actions.
The IRS often investigates companies that benefit from legal tax benefits, and it is a lot easier for them to go after the little man than to accept the armies of lawyers and accountants who have large companies at their disposal. This imbalance is not only unfair, but it is also harmful to our economy, killing jobs and undermining the entrepreneurial spirit that America defines.
In March, former IRS clockers Gary Shapley and Joseph Ziegler were promoted to managerial positions at the Ministry of Finance with the mandate to reform the IRS. This is a welcome development. Shapley and Ziegler have certainly cut their work for them.
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Time and again IRS -Audits fall disproportionately to small companies and people who earn less than $ 400,000 a year. Larger companies can afford to absorb the burden of long audits, but an audit can be devastating for a small company. The process is time -consuming, expensive and distracting, so that business owners are often forced to distract resources from serving customers, paying employees and growing their companies.
A report from the Government Accountability Office from 2023 showed that more than 90 percent of the audits against middle class families and small companies are under the threshold of $ 400,000. It is clear that large companies and billionaire tax cheats are not the primary goals in the Crosshairs of the IRS.
Fortunately, the wish of the previous administration to expand the IRS by tens of thousands of new agents thwarted by President Donald Trump, who announced an recruitment inspection in January to protect small companies and middle-class families against an audit dragnet. But Trump’s action also underlined a critical truth: the IRS still has an enormous power with far too little responsibility, and without serious reform, that power will be misused.
The broader economic consequences of this imbalance are enormous. Small companies are the backbone of creating jobs in America, but they are discouraged to invest, take and expand because they fear that the IRS will punish them for success.
I spoke with countless entrepreneurs who quietly stop growing because they do not want extra control. This hair -raising effect is invisible for most policy makers, but it is real. When entrepreneurs offer caution on expansion, jobs are not created, innovation is stifled and communities lack economic opportunities.
In the meantime, compliance with large companies gives a competitive advantage, because they can hire teams from professionals to handle audits and disputes while exposed smaller companies. The result is a system that anchors large companies and suppresses competition, exactly the opposite of what a healthy free market economy should promote.
We can and must do better. The reforming of the IRS must start by re -balancing its priorities. Enforcement is important, but it should not be at the expense of honesty and service. The congress must set clear limits for how many small companies can be checked each year and require the IRS to justify its audit selections with transparent statistics. Independent professional processes must be strengthened, so that small companies can dispute about the government without going bankrupt in the process.
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Every new IRS financing must be diverted to improve the taxpayer, simplifying compliance and providing timely guidelines. The IRS must also be obliged to publicly report audit results, including how many audits end without changes or for taxpayers, so that Americans can see for themselves whether enforcement is performed fairly.
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Small companies do not require special treatment; They ask for a level playing field. They are willing to pay their honest share, but they should not be disproportionately burdened, simply because they lack the means to fight back. America’s prosperity is always built on the back of entrepreneurs who are willing to take risks and create opportunities. If those people believe that every step forward can activate an expensive audit, many will hesitate and our economy will suffer.
Because of honesty, because of the growth and because of the American entrepreneurial spirit, we must now reform the IRS. An agency that punishes the vulnerable punishment and at the same time allows the powerful escape, people should not serve. A tax system that discourages the creation of jobs fails the nation. If we want small companies to thrive and the economy to grow, we must return the little man to the same foot and make the IRS responsible for the people intended to serve.
