On August 16, 2022 the Inflation Reduction Act was signed into law. It does a number of things, but for the purposes of Accounts Payable and Tax the big line item is the $80 billion for the IRS. Let's have a look at what that means for you as you get ready for 1099 filing season.

First off, $80 billion is a truly massive number. Given the IRS' current level of funding, it could cover the IRS budget for nearly six years. To put that number in further perspective, according to former IRS Commissioner John Koskinen the portion of that money dedicated to enforcement will allow the IRS to replace or hire as many as 50,000 auditors.

Moreover, the IRS has emphatically stated that audits will not increase on regular taxpayers earning less than $400,000 per year. Instead, those auditors and their efforts will be targeted squarely at the wealthy and the businesses and large organizations they own (typically as shareholders in these organizations). That means the company, corporation, or other medium-large size organization you work for will be far more likely to get audited for mistakes or omissions in 1099 filing made this fall and winter.

This upcoming 1099 filing season is going to be crucial for your organization. There is a significant chance that the number of B-Notices your Accounts Payable department deals with next year will be dramatically higher; the odds that your organization may face an IRS proposed penalty notice will be more likely; and the odds that your organization will even come under audit will be greater. It behooves you to prepare for this coming onslaught of attention from the IRS - one that will be more intense than anything we have seen during most of our careers in Accounts Payable, Tax, or as an independent CPA.