In what he described as “the start of a sweeping, historic effort,” IRS commissioner Danny Werfel announced a plan to focus more tax enforcement efforts on the wealthy and those who abuse the law. While some of the plans are familiar — such as auditing more millionaires — the specificity is new, particularly an announced focus on large partnerships.

Expanded work on digital assets. Following the recent release of proposed regulations for broker reporting (REG-122793-19), the IRS Virtual Currency Compliance Campaign, which began in 2018, will continue.

Labor brokers. The IRS says it has seen instances where construction contractors are making Form 1099 payments to an apparent subcontractor that is really a shell company with no legitimate business relationship with the contractor. This money then flows back to the original contractor. The IRS plans to conduct both civil audits and criminal investigations.

Earned Income Credit Focus.  The IRS will improve the tax system for middle- and low-income people by ramping up efforts to take down schemes such as those that promise exorbitant earned income tax credit refunds.  Scammers and fraudsters frequently target taxpayers with more modest incomes by promising inflated earned income tax credit refunds or tricking people into tax-related identity theft. The IRS will continue its work to ensure audit fairness; protect taxpayers from scams and schemes; and protect against identity theft.

Artificial Intelligence Systems (AI).  Through the use of AI, the IRS will identify patterns and trends that were not visible previously, allowing them to target tax fraud issues.