IRS Said to Need Additional $1B to Implement New Tax Law

IRS Said to Need Additional $1B to Implement New Tax Law

On Thursday, the Treasury Department released updated tax withholding tables that reflect the changes thanks to the tax bill Republicans passed in late December.

"We estimate that 90 percent of wage earners will experience an increase in their take-home pay", Treasury Secretary Steven MnuchinSteven Terner MnuchinMark Mellman: History's judgment Trump's motorcade greeted with chants of "lock him up" in NYC Treasury watchdog probes lack of tax plan analysis from Mnuchin MORE said in a news release. The tables are also aimed at avoiding over- and under-withholding of tax as much as possible.

The guidelines were rushed out with such speed that, according to the Washington Post, the IRS will urge individual people to not just trust their employer, and instead use an online tool to make sure they aren't "dramatically overpaying or underpaying their taxes". Workers will see changes in their February paychecks once employers adopt the new guidance.

The report says that IRS funding has fallen about 20 percent in inflation-adjusted terms since 2010.

"I think this is another ridiculous charge", Mr. Mnuchin said at a briefing at the White House.

Many Americans are likely to see changes and adjustments this year in their tax payments as the law goes into effect. Underwithholding would lead to taxpayers owing more when they file their 2018 returns next year.

"You can't expect the same level of service after losing $900 million and 21,000 full-time employees in seven years", Reardon said.

Top Democratic tax-writers have expressed concerns that Treasury may have applied pressure on the IRS to underwithhold from paychecks so that taxpayers would see a bigger boost to their paychecks during this election year.

Democrats have ordered a review by the Government Accountability Office to determine whether the new tax guidelines are accurate.

The leaders of the committees that wrote the tax law stopped short Wednesday of pledging to spend another half-billion dollars for the IRS.

She notes that there has already been considerable public confusion about withholding changes, the deductibility of prepaid property taxes, and whether states may let taxpayers make charitable contributions in lieu of taxes to claim larger deductions than otherwise would be allowed now that there is a new $10,000 cap on the state and local tax deduction. Ron Wyden (D-Ore.) and Rep. Richard Neal (D-Mass.).

Personal exemptions are a core feature of the current withholding system, but now that they are eliminated, "it's necessary to build a new approach to withholding, which will take some time", the senior IRS official said.

Such a calculator will ask for anonymous inputs - for example, your income, number of dependents and other pieces of information that help determine whether you might be eligible for various tax breaks.

Experts warned before the law's passage that it could trigger confusion in the tax system.

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