The AGC-backed legislation would help reduce the threat to construction firms of time consuming and expensive random or full field audits, regardless of whether the IRS determines any additional taxes are owed.

On January 9, the House of Representatives passed AGC-backed legislation, the Family & Small Business Taxpayer Protection Act (H.R. 23), that would help reduce the threat to construction firms of time consuming and expensive Internal Revenue Service (IRS) random or full field audits, regardless of whether the agency determines if any additional taxes are owed.

AGC recognizes that the IRS could use additional funding and resources. The pandemic put an unprecedented strain on the agency, which has detrimentally impacted taxpayers, including construction firms. Some construction firms who filed amended returns, or, for example, claimed the Employee Retention Tax Credit (ERTC), have not yet received a response from the IRS. In some cases, construction firms have waited over a year for refunds. Likewise, AGC members report that it is often impossible to reach IRS customer service representatives to handle routine inquiries.

However, while the Inflation Reduction Act (IRA) provided an unprecedented level of funding to the IRS–a total of nearly $80 billion over 10 years—90 percent of this funding was allocated towards “enforcement” and “operations support,” while a mere four percent was allocated to “taxpayer services.” This mismatch in funding priorities will not lead to a better taxpayer experience for construction firms.

The Family & Small Business Taxpayer Protection Act strikes the correct balance for taxpayers, by rescinding the IRA’s mandatory enforcement and operations support funding, while leaving in place additional funding for taxpayer services and systems modernization.

Given Democratic control of the U.S. Senate, however, the bill is unlikely to move farther in the legislative process.

For more information, contact Matthew Turkstra at [email protected].