WHAT'S HAPPENING WITH THE INTERNAL REVENUE SERVICE..(IRS)

[FANMKONESE]

My peeps in this post I will keep you updated with what's going on with one of our famous agency known as the Internal Revenue Service...Beleive me some info will pertain to most of you if not all of you...

The tax gap has the IRS ON THE WARPATH MY PEEPS....BE CAREFUL i mean VERY CAREFUL....THE IRS IS DETERMINED TO CRACK DOWN ON NONCOMPLIANCE......and narrow the $300 billion a year difference between taxes owed and actual taxes collected.......

Lawmakers are urging the Internal on disturbed that the rate of noncompliance by individuals and firms rose again last year. And INVESTIGATORS have drawn up a map with routes of attack......recormmended by the GAO (THE GOVERNMENT ACCOUNTABILITY OFFICE)...........


So my peeps doing more AUDITS WON'T BE ENOUGH.....THE IRS will have to AUDIT SMARTER...targetting specific areas where misreporting is HIGH in order to get more BANG FOR ITS AUDIT BUCK........


MORE RANDOM AUDITS STARTED THIS FALL WITH MOST FOCUSED ON SCHEDULE C AND SCHEDULE F.... are meat to aid that effort so range ko'n because the latter will provide data to better tailor future enforcement. For now coming in for more SCRUTINY ARE

SOLE PROPRIETORS who can low ball income and inflate write offs.

ITEMIZED DEDUCTIONS....jean ampil nan nous rinmin bay menti nan ti schedule sa ....So CAREFUL MY PEEPS AK SCHEDULE A SA......ERRORS OCCUR MOST often with medical costs, charitable contribution nous pa bay in reality men nap pran...nap deduct..nan gou jesus....be careful seulement.......LAST piece is Job related expenses....

I will stop now and shall bring you more details soon........
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Personally, I am always ready to learn, although I do not always like being taught."

--Winston Churchill

[daphnee]

thanks famko..IRS pa ti jwet non!!
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"Mwen di non, AYITI PAP KRAZE!!!!"

[Casanova21]

thanks for the info Famn also I notice a lot of people getting Notices for SCH A all those Misc deductions they putting on their tax return. Jean and Phillip who's doing your tax return might not know that for the past two years AMT has been an issue. I know of two people who owe about 5k in taxes becuase of this.

[FANMKONESE]

Good point Casanova I have had a couple of those as well.....

What's more interesting is that SOON UNLICENSED TAX PREPARERS WILL FACE NEW RESTRICTIONS.........A recent injunction against a franchisee of a big tax preperation firm for preparing fraudulent returns was the final straw for TAXWRITERS.....THIS YEAR THEY ACT TO REQUIRE TAX PREPARERS who are'nt CPA , LAWYERS OR ENROLLED AGENTS to pass a test and regularly renew their eligibility......This procedures will AFFECT RETURNS IN 2009 AT THE EARLIEST...........
_________________
Personally, I am always ready to learn, although I do not always like being taught."

--Winston Churchill

[FANMKONESE]

THE TAX GAP

The tax gap is the difference between taxes owed and taxes actually collected...very simple hope you guys are with me so far.......

The IRS estimates that the tax gap was $345 billion in 2001. With roughly 71% of this gap attributed to INDIVIDUAL NON COMPLIANCE AND ERRORS. Now Congress is putting pressure on the IRS to find ways to bring more individal taxpayers into COMPLIANCE and collect over $245 billion in legally owed taxes,this increasing revenues without raising taxes.

Congress is demanding answers.....

Earlier this year the US Treasury secretary testified before Congress that reducing the tax gap may not be possible without "painful requirements on all taxpayers". Senators did not receive this news well, with Senator Max Baucas expressing his frustration that the IRS did not have in his opinion a real plan to close the TAX GAP.Baucas requested the Treasury revise its current plan to include BENCHMARKS, TIMETABLE AND GOAL BY THE END OF 2007. Report is due in the few days....we shall wait and see............

Now WHO'S RESPONSIBLE FOR THE GAP........

IRS estimates the majority of non compliant returns belong to self employed individuals WHO DO NOT REPORT THEIR BUSINESSES ENTIRE INCOME. ....hope you guys can see where I am taking this.....One IRS official has estimated that cash based businesses report as little as 19% of their actual income.........Now i wonder if our bands fall under such category.. .Once I had a conversation with a in the know personality of a band...He did tell me that his band gross income per year was over a million last year......when I asked if he could prove it ie via a tax return he continued by explaining his ways of disguising income and expense for the band..... ........Now I will continue...As a result the IRS has submitted a strategy to COngress focusing on small businesses and individual taxpayers....UNDERREPORTING OF BUSINESS INCOME cost the Treasury $109 billion in income in 2001. By comparison IRS figures show it lost just $14 billion to individuals inflating their deductions.....Most of all fall in the latter category...... ..WE ARE ALL GUILTY OF SUCH......YEAP YOU YOU YOU...... keep shaking your head....YOU...

ANYWAY.....

THE POSSIBLE IRS SOLUTIONS TO ME ARE VERY WEAK.........

One interesting suggestion by the IRS is to require credit card companies to report payments to any sole proprieor of more than $600 in a year.....

The IRS has knowledged that the complexity of our tax code is the single biggest factor affecting compliance. One of their recommendation does include simplifying the tax code, but enforcement appears to be the plan of attack in the mean time....

The IRS also has suggested that brokerages and other third parties boost reporting on individuals investmenets and they would like make repeat offenders who willingful fails to file their returns eligible for a FELONY CHARGE RATHER THAN A MISDEMEANOR....

Well we have certainly not seen the end of this debate....as a tax professional I am just making you guys aware of potential changes coming in the near future..........

SPECIAL SOS... TO THE BANDS....MUSICIANS who are operating THEIR BAND AS A LEGAL BUSINESS....BEWARE.......OF THE ABOVE.........
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Personally, I am always ready to learn, although I do not always like being taught."

--Winston Churchill

[FANMKONESE]

I will post some interesting tax rullings that may help some of you guys......


Tax Court Can Look Outside Administrative Record in Determining Innocent Spouse Relief

February 12, 2009
The Eleventh Circuit has held that the Tax Court could consider evidence outside the administrative record when deciding on a taxpayer’s claim for innocent spouse relief (Neal, No. 06-14357 (11th Cir. 2/10/09)).



The taxpayer had petitioned the IRS for equitable relief under IRC section 6015(f) because, unbeknownst to her, her husband had failed to pay taxes on his income during their marriage. The IRS examining agent denied her request for innocent spouse relief, and the IRS Appeals Office upheld that determination. The taxpayer then sued in Tax Court to contest the denial of innocent spouse relief.



The IRS, at a pretrial hearing, argued that the Tax Court was limited to considering the evidence in the administrative record from the IRS proceedings. The Tax Court held that it could try the case de novo and that its review was not limited to the evidence in the administrative record. Instead, the parties would be allowed to introduce new evidence and testimony at trial. The court based this decision on a prior Tax Court case (Ewing, 122 T.C. 32 (2004)).



At trial, the Tax Court granted the taxpayer innocent spouse relief, and the IRS appealed the decision to the Eleventh Circuit. The appeals court examined the long history of Tax Court (and Board of Tax Appeals) redeterminations of IRS decisions, dating back to 1924, to conclude that the Tax Court in other situations has often gone outside the administrative record to make determinations in trials de novo. Since the innocent spouse provisions of section 6015 are within the same statutory framework as other sections in which the Tax Court reviews IRS deficiency determinations, the Eleventh Circuit held that Congress must have intended that taxpayers also have an opportunity for a de novo trial in innocent spouse cases.
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Personally, I am always ready to learn, although I do not always like being taught."

--Winston Churchill

[FANMKONESE]

Late February 1099-B Mailings Will Compress Tax Season for Many

February 8, 2009
Some brokerage customers of Fidelity Investments won’t receive Forms 1099-B until after the newly extended Feb. 17 general deadline for sending out the information returns, the company said Thursday.



Fidelity, the nation’s largest mutual fund company, asked for and received from the IRS an additional extension to the end of February, said company spokesman Steve Austin. The company intends to send most Forms 1099-B before the Feb. 17 deadline. However, a “small percentage” of customers may not get them until later in the month, Austin said.



“The bad news is that for many of our members this development could further shorten an already compressed busy season by almost two weeks,” said Tom Ochsenschlager, AICPA Tax Division vice president.



Until this year, the deadline for sending Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, was Jan. 31, the same as for Form W-2 and other information reporting forms. Congress extended the deadline to Feb. 15 in the Emergency Economic Stabilization Act of 2008, which also will require brokers to report the cost basis of securities sold, effective in phases starting in 2011. Because Feb. 15 falls on a Sunday this year and the next day is a holiday, the IRS further extended the normal mailing date to Feb. 17.



Tax practitioners have noted that the statutory extension could have the effect of compressing more return preparation into later in the filing season, although those contacted said they didn’t expect to see an effect from the extra extension granted Fidelity.



It was unclear how many other brokerages, if any, have received an additional extension. An IRS spokesman was unable to provide a number Thursday. In January 2007, five large brokerage firms—Merrill Lynch, Morgan Stanley, Wachovia Securities, Edward Jones and Raymond James—received an extra month’s extension for 2006 forms. Failure to file a required information return on time can result in a penalty under IRC § 6721 of $50 for each return, up to a total of $250,000. Issuers may obtain an automatic 30-day extension for filing the forms with the government by submitting a completed Form 8809 and may request an extension of up to 30 days for providing copies to taxpayers by submitting a written request to the IRS.



In Notice 2009-11 and last week in a news release, the IRS said the Feb. 17 date applies to other tax information that brokers report with 1099-B securities information on a consolidated year-end form, including interest and dividends. It noted the Feb. 15 deadline was recommended by a federal advisory committee that had reported that many brokers issued revised forms for 20% of their clients.



Some tax practitioners agreed that better accuracy might be worth the wait.



“It will hold up preparation or completion of returns until March,” said Kip Dellinger, senior tax partner at Kallman and Co. LLP in Los Angeles. “But the bigger problem in the past and prospectively is the flow of amended and revised 1099-Bs that goes on for months.”



Trust returns, with their limit of 65 days from year-end to elect under section 663(b) that a current-year distribution be regarded as coming from the prior year’s distributable net income, might also be pressed for time by the extension. They also have only 65 days to decide whether to file Form 1041-T to allocate the trust’s estimated tax payments to the beneficiaries. This year, that date falls on March 6, less than a week after Fidelity’s extended due date. Still, distributions can be affected by many other factors, Dellinger said.



“Good planning can insulate a trust from problems in this area, albeit knowing the income is useful,” Dellinger said.



Justin Ransome, a partner in private wealth services at Grant Thornton in Washington, D.C., agreed.



“I can’t tell you from my experience that trustees rely upon 1099s to determine what they’re going to distribute,” he said.



For individual returns, the main force compressing tax season is likely to remain simple taxpayer procrastination, Ransome said.



“Even though tax preparers harp upon getting information in as soon as possible, taxpayers never get it to you until two or three days before it’s due,” he said.
_________________
Personally, I am always ready to learn, although I do not always like being taught."

--Winston Churchill