Goal 2 | Enforcement

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Enforce the tax law fairly and efficiently to increase voluntary compliance and narrow the tax gap.

Taxpayers deserve to know that all taxpayers are accountable to the same tax laws and pay their fair share. The gross tax gap is the difference between taxes owed and taxes paid on time. These unpaid taxes create an additional financial burden for taxpayers who fully comply with the law. To make progress toward improving voluntary compliance, we will continue to strengthen enforcement capabilities, improve outreach and proactively work to analyze new tax requirements and understand taxpayer behaviors and trends. We will also leverage new technology and data analytics to detect and combat sophisticated evasion techniques and facilitate timely audits and collection investigations. These efforts enable us to fairly enforce tax law and stop those who abuse the system, such as malicious actors that take advantage of taxpayers or those who underreport or fail to file a return.

Protecting taxpayer rights, equitably enforcing the tax laws and providing taxpayers with the information and services they need are critical aspects of our efforts to improve compliance. For filers and non-filers alike, we must support all taxpayers by providing them with the services, information and opportunities to fairly address any issues with meeting their tax obligations. The IRS commits itself to the highest standards in administering and enforcing the tax code with integrity, transparency and objectivity. Our enforcement efforts should successfully narrow the tax gap, build trust with all taxpayers and keep pace with emerging threats without burdening compliant taxpayers with unnecessary audits.

Trends and Challenges

Rising Responsibilities and Fewer Resources

The IRS’s workload has been increasing year-over-year due to several factors including, but not limited to:

  • growth in the number of returns filed
  • new tax laws to implement
  • COVID-19 related relief
  • changing expectations for digital accounts and communication

This perfect storm of factors means the IRS is under resourced to fulfill its enforcement activities and is unable to fully fund critical services and programs. The IRS must ensure it is maintaining institutional knowledge of how to combat avoidance activities, updating necessary tax guidance for new investments and income avenues (for example, cryptocurrencies and gig work), and investing in analytical approaches that improve non-compliance identification and case selection. Improving voluntary compliance promotes confidence in the tax system and ensures adequate funding for governmental operations.

A graphic with an arrow representing the Tax Gap pointing up and an arrow representing resources pointing down.

Objectives & Strategies

Address Non-Compliance

Objective 2.1: Improve operations to effectively and efficiently identify and address non-compliance.

The IRS will work with taxpayers to help them meet their obligations and overcome any challenges to filing, paying and reporting their taxes that may result from critical life or business events throughout the year. Operational enhancements, like applying machine learning and other advanced analytics techniques, improve our understanding and ability to predict customer behavior, select, route and resolve cases efficiently and forecast unpaid tax amounts.

Strategy 2.1.1: Reduce the taxpayer burden by decreasing the time between filing and compliance issue resolution.

Strategy 2.1.2: Establish forecast methods that enhance future tax gap estimates and initiate research on additional factors contributing to the tax gap.

Strategy 2.1.3: Deploy advanced technologies to analyze and identify patterns of non-compliance and facilitate appropriate case selection.

Strategy 2.1.4: Enhance predictive analytics to provide potential recommendations for taxpayer actions or treatments using aggregated case data.

Fairly Enforce Tax Laws & Collect Taxes

Objective 2.2: Enhance enforcement efforts to collect unpaid taxes in a fair and impartial manner.

Collecting unpaid taxes requires effective deterrence and enforcement capabilities. The IRS is increasing focus on non-compliant, high-income and high-wealth taxpayers, business partnerships and large corporations that make up a disproportionate share of unpaid taxes. We will optimize our state-of-the-art enforcement tools and processes to collect unpaid taxes as part of a fair and impartial enforcement process. A crucial part of deterrence involves increasing our presence in the communities we serve, publicizing enforcement successes, like our nearly 90% conviction rate from criminal cases, and making continuous improvements based on feedback from community members.

Strategy 2.2.1: Strengthen the deterrent effect by increasing our community presence and audit coverage, especially for cases with a high risk of non-compliance.

Strategy 2.2.2: Improve public confidence in the tax system and promote compliance by publicizing criminal prosecutions and civil enforcement efforts.

Strategy 2.2.3: Support optimization of the collection process to best secure payment from non-compliant taxpayers.

Proactively Identify Fraud

Objective 2.3: Proactively identify current and emerging fraud schemes and other threats using real-time intelligence and analytics.

Investments in emerging technology and process optimization enable the IRS to proactively identify cybercrime and emerging fraudulent behaviors, as well as quickly mitigate potential damages. New methods of advanced data analytics, using natural language processing and artificial intelligence, are creating predictive models that make connections to discover deeper insights and generate recommendations to combat tax fraud and increase compliance. The IRS continues to enhance our anomaly detection capabilities to identify fraud and other non-compliance and to help guide our enforcement efforts.

Strategy 2.3.1: Consolidate fraud-related compliance efforts to streamline operations and better allocate resources.

Strategy 2.3.2: Proactively provide taxpayers and other stakeholders with information on how to protect themselves against fraud schemes, abusive tax avoidance efforts and cybersecurity threats.

Strategy 2.3.3: Utilize emerging technology to rapidly identify and thwart fraudulent activity while minimizing false positives from fraud detection models.

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Modernizing Case Management Improves Taxpayer Experience and Compliance

Enterprise Case Management will give employees a single source for real-time access to a 360-degree view of the taxpayer’s history and a suite of tools to detect, prevent and address non-compliance in an emerging tax ecosystem.

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Criminal Investigation Time Spent

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Virtual Currency Education

The Office of Fraud Enforcement is investing in world-class blockchain tracing and virtual currency analytics tools for civil compliance employees to increase their awareness and fluency in virtual currency investigative techniques. The new Virtual Currency Learning Academy provides all IRS personnel unlimited access to beginner through expert-level training in cryptocurrencies, blockchain tracing, Anti-Money Laundering compliance, and advanced topics, such as Altcoins.

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Goal 2: Measuring Success

Progress and success of our Enforcement Goal will be supported by measures, including but not limited to:

  • Exam Starts: Three separate measures that measure the number of examinations started during the fiscal year in specific income categories of high income individuals, partnerships and large corporations.
  • Repeat Non-Compliance Rate: Measures the percentage of individual taxpayers in a fiscal year with non-compliance two years after the initial tax year that contains a filing, payment, or reporting compliance issue.