The filing season is stressful for many Americans, but it's also an important moment for the Internal Revenue Service (IRS) to ensure taxpayers report their income truthfully and pay their due taxes.。

Taxpayers and the IRS have been engaged in a cat-and-mouse game for years, with individuals and companies looking for ways to reduce their tax obligations and the IRS struggling to plug tax loopholes.。

Cat and Mouse game

Disputes between taxpayers and the IRS are not new。For decades, individuals and businesses have been using a variety of planning strategies to legally reduce their tax obligations, including taking advantage of deductions, credits, exemptions and other benefits in the tax code.。

As a result, the IRS is constantly revising tax laws and regulations to fill in the gaps and plug potential loopholes.。The complexity of the tax system rises as policymakers grapple with various methods of tax avoidance。However, this complexity also creates opportunities for people and organizations to exploit the uncertainty of tax laws.。

Tax loopholes and tax planning.

It is important to distinguish between legal tax preparation and exploiting tax loopholes.。Tax planning is the use of provisions in the tax code to reduce an individual's tax payments without violating the law, including options for retirement accounts, investments and charitable contributions。

Tax loopholes, on the other hand, refer to the use of flaws or ambiguities in tax regulations to gain undue tax advantages。These loopholes often require creative interpretations of tax laws or the use of legal structures to significantly reduce tax liability.。

Impact of tax reform

The Tax Cuts and Jobs Act of 2017 (TCJA) is an important development in recent years in an attempt to close some tax loopholes.。This comprehensive tax reform law makes significant changes to the tax code, including lowering the corporate tax rate, modifying individual tax brackets, and eliminating or limiting certain deductions。

TCJA bill aims to simplify tax laws, limit tax evasion opportunities。It limits itemized deductions, including state and local tax deductions (SALT) and mortgage interest deductions, and also reduces some of the tax benefits associated with certain business models.。

TCJA closes some loopholes, but also adds more difficulties and opportunities for tax planning。The bill created a "Qualified Business Income (QBI) Deduction" provision that allows eligible business owners to deduct up to 20 percent of their eligible business income, sparking debate about abuse and innovative structures to maximize the likelihood of tax benefits.。

International tax issues

International taxation is another area where tax loopholes are a concern。As a result of economic globalization, multinationals now have more options to participate in profit-shifting methods and take advantage of differences in tax rates between countries.。

The Organisation for Economic Co-operation and Development (OECD) has been working on a project called Base Erosion and Profit Shifting (BEPS) to tackle the problem.。BEPS aims to create global rules to prevent tax avoidance by multinational companies, aiming to ensure that gains are taxed where economic activity takes place and value is created.。

Although BEPS is an important step in reducing tax loopholes around the world, its effectiveness depends on widespread adoption and implementation by governments.。Solving the problems brought about by foreign tax planning is still a complex task.。

Bitcoin and Emerging Technologies

With the advancement of technology, new forms of income and assets have emerged, creating new problems for tax authorities。For example, the increasing popularity of cryptocurrencies as a means of investment and exchange; on the other hand, the decentralization and anonymity of cryptocurrencies have also raised concerns about tax avoidance。

To address these concerns, the IRS has issued recommendations on the tax treatment of cryptocurrencies and requires taxpayers to declare Bitcoin transactions.。The anonymity of some cryptocurrencies and the cosmopolitan nature of the digital economy pose major problems for tax compliance。

Tax Management and Compliance

The IRS has been investing heavily in technology and data analytics to strengthen tax enforcement and compliance.。The institution has access to a large amount of financial information, such as bank records, income reports, and other financial transactions。This data allows the IRS to more effectively spot inconsistencies and potential tax evasion。

The IRS is also paying more attention to high-income individuals and complex tax structures such as offshore accounts and trusts.。High-profile tax evasion cases have drawn public attention and served as a deterrent to potential tax evaders。

Legal disputes with the Tax Court

Taxpayers and the IRS often clash in court over how to interpret tax laws and regulations。In tax court, taxpayers can challenge the position of the IRS, and court decisions affect the enforcement and interpretation of taxes。

Tax court cases can uncover anomalies in the tax system that lead to regulatory changes or legislative action to clarify tax legislation。The justice system provides another way to address potential tax loopholes and ensure that taxpayers comply with the letter and spirit of the law。

Impact and controversy

Recently, the Internal Revenue Service's efforts to close most tax filing loopholes have been supported and overseen by members of Congress.。As the government avoids a shutdown, lawmakers turn their attention to tax fairness and employee retention credit issues。

In an October 2 letter, Senators Elizabeth Warren, Sheldon Whitehouse and Obby Obby each expressed their views.。In an October 2 letter, Elizabeth Warren, Sheldon Whitehouse, Chris Van Hollen and Bernie Sanders urged the Treasury to use its rule-making powers to close tax loopholes that they say create inconsistencies and unfairness in the tax code.。

The provisions, which build on last year's Inflation Cuts Act, target tax avoidance by high earners and large multinational corporations.。The senators called for guidance on issues such as "dynastic wealth" and foreign asset transfers, tax liability for passive earnings of subsidiaries, and payroll taxes owed by fund managers.。They stressed the need to correct past rulemaking and ensure fairness in the tax system, especially for the wealthy.。

In another development, the IRS decided to stop processing new employee retention credit (ERC) applications, citing a backlog of problematic applications caused by the proliferation of malicious tax preparers at the "ERC factory."。The decision has raised concerns as it could exacerbate waiting times and discourage legitimate applications from getting paid.。

Jason Smith, chairman of the Ways and Means Committee, and David Schweikert, chairman of the oversight subcommittee, wrote to the IRS seeking clarification of the decision.。They urged the IRS to speed up processing of legitimate applications and put safeguards in place to prevent future fraud while protecting taxpayers from scams.。

The ongoing conflict

In short, the battle between taxpayers and the IRS over tax loopholes continues。While the IRS has worked to close certain loopholes and improve tax enforcement, tax planning is still a legal practice。The complexity of tax laws, the introduction of new financial technologies and tax issues around the world provide opportunities for individuals and organizations to engage in creative tax planning.。

Whether the IRS can close most tax filing loopholes for ordinary people depends on a variety of circumstances, including legislative changes, enforcement actions, and taxpayer compliance。As the tax environment evolves, taxpayers and the IRS must adapt to new challenges and possibilities, highlighting the need for a fair and effective tax system for society as a whole.。