Audit Feed

Much is made of the United States' voluntary compliance tax system. The IRS depends on every taxpayer to honestly and accurately report his or her earnings and figure the correct tax due on the amounts. Apparently, we agree with the self-reporting system, with most taxpayers saying cheating on taxes is wrong. Of course, part of the reason we look askance at fudging Form 1040 figures is because we're afraid the IRS will catch us. However, our fear of a tax audit might be exaggerated, according to the latest IRS Data Book. Fewer return reviews: Audits, or examinations as they're called... Read more →


If taxpayers agree with the National Taxpayer Advocate that getting tax help from the Internal Revenue Service is terrible, you might expect folks to transfer their frustration to their returns. Unable to get the answers to their tax questions, they could say, "To hell with it. I'm just putting whatever I want on my 1040." The latest IRS taxpayer attitude survey, however, says that in most cases that's not the reaction. A notable majority of taxpayers say cheating on taxes is wrong. Tax cheating is wrong: Every year, the IRS releases its Data Book, which contains information from the prior... Read more →


Things that are never good: an unexpected envelope from the Internal Revenue Service. That's the assessment of one of my personal finance writer pals. Today, she's working to clear things up in connection with one of those mailing she got from Uncle Sam's tax man. It's not a fun exercise, but it's definitely one you should undertake if you disagree with an IRS decision. In fact, the IRS own Taxpayer Bill of Rights covers this situation in several of its tenets. Specifically, I'm looking at every taxpayer's right to: Pay no more than the correct amount of tax, Challenge the... Read more →


Most of us don't cheat on our taxes. And by cheating, I mean intentionally enter false information on our returns. Sure, we don't like paying taxes, even after they're trimmed a bit via periodic federal tax law changes. Still, we suck it up every spring and do our tax duties. But most is not all. Some folks do fiddle with the figures they put on their 1040 forms. The Internal Revenue Service does what it can to stop and/or catch such evasive entries. Budget cuts and staff attrition, however, hamper such audit efforts. That's why the IRS takes all the... Read more →


Tax season is over for another year. Now all that's left cleaning up after the filing crunch. I know many of y'all are tempted to simply toss everything in the trash. Don't. You don't have to the tax version of television's Hoarders, but there are some tax-related documents you need to hang onto, at least for a while. These 7 frequently asked questions and answers can help you get a better handle on your tax record keeping. 1. Why should I keep records? Well-organized records make it easier to prepare your tax return. Documentation, both the amount and in good... Read more →


Photo by Will Keightley via Flickr CC Afraid you'll face an Internal Revenue Service audit? Don't bet on it, says a veteran oddsmaker. The tax audit odds for 2019 will be approximately 1 in 172, says SportsInsider.com's James Murphy, a sportsbook consultant and specialist in novelty betting odds. 25% of filers worry about audits: That slim audit possibility, however, didn't seem to affect folks who participated in a LexingtonLaw survey conducted before this tax season started. The Salt Lake City-based law firm found that a quarter of Americans are afraid they'll be audited. Older filers are more worried. Thirty-three percent... Read more →


The larger standard deduction amounts created by the Tax Cuts and Jobs Act (TCJA) mean that fewer filers claim itemized expenses. That also could be trouble for those of us who still will file a Schedule A. With fewer itemized expenses to review, the Internal Revenue Service theoretically could have more time to spend looking at everything we write off on this Form 1040 attachment. And excessive deductions are one of the common tax audit triggers. One of those deduction amounts, the one for state and local taxes, is changing, thanks to the new tax law. Some taxpayers and their... Read more →


Folks in Belzoni, Mississippi, aren't thinking about taxes today. They're celebrating the 44th Annual World Catfish Festival. But in addition to being the catfish capital of the world (the closing of its museum notwithstanding), Belzoni is the county seat of the most audited county in the United States. Residents of Humphreys County, a rural county in the Mississippi Delta, is one of the country's poorer counties, with more than a third of its residents living below the poverty line. Those low incomes also probably contribute to a new study's findings that Humphreys County is the area that is most audited... Read more →


It's official. House Democrats have formally requested copies of the last six years of Donald J. Trump's personal and business federal tax returns. Trump has steadfastly refused to make public his taxes, breaking a modern-day tradition set by presidential candidates — and in-office presidents (and vice presidents) — of letting the public have a glimpse of White House 1040s. The main reason Trump has given for keeping his taxes private is that his personal and business filings are under audit. Tax experts throughout the media agree that no sane person would give their tax returns during an audit. After the... Read more →


Broad City image via Giphy.com Do you have to file a return? Sorry to be the bearer of bad news, but the answer usually is yes. But there's a difference between having to file a tax return and submitting a 1040 form because you should. And by should, I mean when it's to your advantage to do so. Yes, that does happen in the tax world now and then. When filing is required: First, though, let's look at when the tax code says we must send the Internal Revenue Service a Form 1040. Although the 1040 has a new look... Read more →


IRS headquarters image by Kari Bluff via Flickr Creative Commons The Internal Revenue Service has some good news for taxpayers and sort of good news for its staff. The agency is calling back more than half — specifically, 46,052 or almost 55 percent of its more than 80, 265 — employees. These are workers who, according to the updated government shutdown contingency plan issued Jan. 15 by the Treasury Department, are necessary for the IRS "to continue return processing activities to the extent necessary to protect Government property, which includes tax revenue, and maintain the integrity of the federal tax... Read more →


Screenshot from C-SPAN broadcast of the convening of the 116th Congress. Click image for full video. It's official. The 116th Congress is in session, with the Democrats retaking control of the House. As expected, longtime California legislator Rep. Nancy Pelosi is now Speaker of the House. Also as expected, presidential tax returns are atop the House Democrats agenda. Yes, I'm talking about the still unseen 1040s of Donald J. Trump, both those he filed while a candidate (and before), as well as his post-election filings. Trump was the first major-party presidential nominee since the 1970s to refuse to release his... Read more →


Tax refund delivery isn't the only tax function that likely would be delayed if the federal government is shut down for an appreciable length of time. Tax audits, or examinations at the Internal Revenue Service calls them, also will be sidelined if fewer agency employees are at work. A lot of folks say that's not a problem. I get it. Nobody likes tax audits, even — maybe especially — when you haven't intentionally done anything wrong with your tax filing. But audits are a key component of taxpayer compliance. Why audits are important: The rationale for auditing returns comes from... Read more →


This photo via Donald J. Trump's Twitter account shows, it says, him signing on Oct. 15, 2015, his 2014 federal return. It's still the only glimpse of Trump's federal tax returns that he's ever provided, either before or after moving into the White House. It's official. Donald and Melania Trump were among the millions of taxpayers who got tax-filing extensions and finally this week filed their 2017 return. It's also official that we won't be seeing the Trumps' 2017 taxes. No Trump taxes: Trump, as he made clear during his presidential campaign, won't release his taxes while they're under audit.... Read more →


Like the never-ending string of decimals it commemorates, Pi Day continues. On this year's official March 14, 2019, celebration of this mathematical marvel, I'm reposting a previous π Day item, with its still applicable tax advice on rounding tax form entries. Doing taxes is all about the numbers. The forms require our Social Security number and that of our spouse and dependent children. Similar identification digits also are key on tax forms from, for example, our employers and other entities that contribute to our taxable income. And, of course, we have to put in all those figures about our earnings... Read more →


UPDATE, Feb. 8, 2018: The Trump Administration made it official this afternoon, announcing Donald J. Trump's intent to nominate Charles P. Rettig as the next commissioner of the Internal Revenue Service. If confirmed by the Senate, Rettig will serve a five-year term that began Nov. 12, 2017, when prior commissioner John Koskinen left. Tax practitioners are generally pleased to see someone from their ranks selected to helm the IRS. Capitol Hill reaction also was positive. "With a long history of helping families and job creators navigate the tax code and stand up to the IRS when the agency is wrong,... Read more →


We did it! We made it through the wild ride that was 2017. It ended in a particularly chaotic fashion, with a major tax bill that was literally written on the fly even on its last day of Congressional consideration. via Giphy.com Studios Now it's time to hunker down for what 2018 has to throw at us on the tax front. However, before we dive head-first into the new year, I'm taking one of the 365 days, just like I did at the start of 2017, to list my top 10 tax stories from the previous year. These are not... Read more →


Before you can write off your business expenses, you must show that you were indeed trying to turn a profit. That basic business tax tenet was confirmed by a recent U.S. Tax Court decision. In a summary opinion, Special Trial Judge Daniel A. Guy, Jr., sustained the Internal Revenue Service’s accuracy-related penalty against Eric Zudak based on tax that was reduced by incorrect business expenses claims. The judge held that Zudak wasn’t entitled to a deduction for expenses he paid for his film festival activity because he didn’t conduct the activity in a businesslike manner or engage in the activity... Read more →


India tax officials say their effort to reduce large stashes of illicit cash has led to markedly more tax compliance. Such efforts to get more taxpayers to be honest are ongoing globally, including by the Internal Revenue Service here in the United States. 500 and 1000 Rupee notes that were recently demonetized by the Indian government. It’s no secret that the Internal Revenue Service looks much more closely at business that are cash heavy. The IRS, supported by other government studies, has found that cash intensive companies — which are, as the name indicates, businesses that receives a significant amount... Read more →


The Internal Revenue Service has expanded its digital options, offering email notification for some e-paying taxpayers and web video conferencing for appealing tax disputes. You have IRS email: Yes, this time that email really could be from the IRS. But only in certain circumstances. The IRS announced its new email notification for folks who pay via Direct Pay and Electronic Federal Tax Payment System (EFTPS) in, what else, an email. The July 21 electronic message to tax professionals let them know that their clients who use those two payment options can sign up to get notifications about those payments in... Read more →