Watch out for the Tax Man: Biden’s plan to boost IRS funding by $80 billion
President Biden seeks to increase Internal Revenue Services (IRS) funding by $80 billion over the next decade in an effort to reshape the social infrastructure of the US economy. Biden’s proposal comes as the IRS is struggling with the volume and complexity of returns following a large number of employee cuts in recent years, resulting in a tax revenue loss that could total to $1 trillion per year. The proposal is set to boost enforcement investing in both increased staffing and technology to crack down on tax evasion of wealthy individuals and corporations to help fund the American Families Plan. It is estimated the investment could generate $700 billion in tax revenue over 10 years.
What does this mean for companies with remote and distributed workforces?
A robust and sustained investment in the IRS will ensure a much more rigorous tax system in the US. As resources start to strengthen, it is expected the rate of audits will aggressively increase. With remote work proving to be an overwhelming success for both employees and employers, the percentage of workers permanently working remotely is expected to double in 2021, in comparison to the pre-pandemic world according to a survey conducted by Enterprise Technology Research. As this trend continues to grow, special attention is required to ensure a company and its employees are adhering to the many compliance issues that come with managing a workforce that is more distributed than ever.
The challenge for many organizations is understanding where their employees are physically working. A recent Topia survey shows since the COVID-19 pandemic began, 28 percent of employees have worked outside their home state or country but only one-third reported all those days to HR. Consequently, their employers may have unknowingly failed to withhold payroll taxes appropriately, which could result in exorbitant penalties when the taxman comes knocking at the door.Where your employees are working can have a significant impact on where your business and employees owe taxes, and the amount of taxes owed. As the IRS ramps up on audits, staffing and technology, employee location monitoring is going to be crucial for companies who may currently unintentionally have tax compliance blindspots. 94 percent of employees say they are comfortable for their employers to know the country, state and city location. Topia Compass, accurately monitors employee working location at a jurisdictional level to provide audit-defensible data, and the insights needed to accurately withhold taxes in line with international and US domestic regulations watch this 2-minute video to learn more.