Audit Feed

Photo by Dewang Gupta on Unsplash In 2019, the Internal Revenue Service received nearly 156 million tax returns. Then came the COVID-19 pandemic. In 2022, the number of 1040s filed hit 169.7 million. The increase continued in 2021 with the IRS receiving 169.1 million returns, and into 2022, when 164.3 returns were sent to the tax agency. The main reason for the 2020-2022 filing spikes was the coronavirus-related financial help — economic impact payments and increased advance Child Tax Credit amounts — that the IRS was tasked with delivering. Many, OK most, of those millions who hadn't filed before 2020... Read more →


Photo by Hassan OUAJBIR The first work week of 2023 is in the books. How many miles did you drive for business purposes? If you're using your personal vehicle to conduct business you need to know. And if the number is to satisfy an Internal Revenue Service examiner's question about your mileage deduction, you need to be exact. The IRS can disallow questionable guesstimates, meaning your tax deduction could end up being zero. The U.S. Tax Court has backed up the agency when taxpayers don't keep adequate records. To help you avoid that unwanted tax reversal, here are some do's... Read more →


The tax year is over. Long live the tax year. Taxes are, if nothing else, persistent. Sure, there are a few (or more) changes every year, even if it's only inflation adjustments. But even in years when the changes are negligible, they are back, starting to add up on the first of every January. That's why 2023 is the first By the Numbers honoree of this new year. The transition from an old to a new tax year is also the focus of this post. It's a look at six tax matters that affected or at least fascinated us in... Read more →


Before the House Ways and Means Committee released six years of Donald J. Trump's federal filings, the last time was got an ostensible glimpse of the former president's Form 1040 was back in October 2015. That's when he shared this photo on his Twitter account of him signing what he said was his federal tax return for that year. With just a few hours left in 2022, some of us are doing some last-minute tax accounting. OK, maybe that's just me and a handful of others who've already planned our annual living room countdown to 2023. I know that one... Read more →


Some taxpayers might not be this happy in 2023 with their federal tax refund. (Image via Giphy) Many folks are already eagerly anticipating the 2023 tax filing season because they expect to get a refund from Uncle Sam. They might be disappointed. In a recent news release encouraging taxpayers to get ready for the upcoming filing season, the Internal Revenue Service slipped in this warning: Refunds may be smaller in 2023. There are three tax issues in 2022 that contribute to why the IRS will be sending some taxpayers smaller refunds when they file next year. No extra coronavirus funds:... Read more →


Regardless of what prompts an IRS examination, aka an audit, take advantage of the Taxpayer Bill of Rights guarantee that you can get professional help to get you through the process. Photo by SHVETS Production In an expected follow-up to reports that Donald J. Trump, while in the Oval Office, wanted the Internal Revenue Service to audit his perceived foes, a House tax writing committee member is asking for an investigation into the former president. Rep. Bill Pascrell (D-New Jersey), who chairs the Ways and Means Oversight Subcommittee until the next GOP-controlled House is sworn in, wrote the Attorney General... Read more →


The Tax Gap is the amount the Internal Revenue Service says it is owed, but which it's been unable to collect. That amount now is $496 billion. The figure, which was reached after the IRS analyzed tax activity from 2014 through 2016, is an increase of $58 billion from the agency's last estimate. The IRS also did some Tax Gap forecasting. The agency's projections for tax years 2017 through 2019 show an estimated $540 billion per year. Both those Tax Gap amounts are huge, and disturbing. That's why they earn this weekend's dual By the Numbers recognition. Tax Gap components:... Read more →


Tyle Perry working on one of his many productions. (Facebook photo) Most of us would celebrate getting a $9 million refund from the Internal Revenue Service. But then, most of us aren't billionaire media mogul and philanthropist Tyler Perry. When an IRS audit resulted in Uncle Sam handing over the multimillions, Perry fired his accounting team. "I'll let you make a million mistakes, but you can't do the same thing over and over again. That's how I run my business. Here's the mistake. Let's fix it; let's move forward," Perry told the audience at a recent Earn Your Leisure Conference.... Read more →


If you must have follow-up discussions with the Internal Revenue Service, one of the rights guaranteed under the Taxpayer Bill of Rights is the option to hire an authorized representative. That can be anyone, from a relative to a paid tax professional. However, in some cases, your representative must be authorized to practice before the IRS. You also need to make sure to officially designate your chosen tax representative, or as it's known in tax-speak, third-party authorization. That's done by filing a written declaration with the IRS — Form 2848 (more on this later) can be used here — stating... Read more →


Photo by Nick Fewings on Unsplash One of the outcomes of an audit is that the Internal Revenue Service finds no reason to demand changes to a return. That's obviously a welcome result. None of us want to end up paying Uncle Sam more taxes, plus penalty and interest charges. But there's still is a cost. We've likely paid a tax professional to help us through the process. And as the old credit card ad says, our time is priceless. Some audits end up OK for filers: The generally good news, according to the Aug. 4 Kiplinger Tax Letter, is... Read more →


Photo by krakenimages on Unsplash Are you freaking out about the possibility that one of the new Internal Revenue Service enforcement agents will be coming for you? Most of us don't have to worry. The prime targets are the very wealthy. Why has the IRS been instructed to go after this filing demographic? One reason is because the richest taxpayers who try to hide taxable assets offer the biggest return when they are caught. Another reason is that they've been flying under the IRS audit radar for way too long. Dramatic drop in high wealth audits: A Government Accountability Office... Read more →


Tax legislation is much more than just changes to the Internal Revenue Code. It's also a political statement. In an election year, which is essentially every year nowadays, it's also a political weapon. Republicans, who currently are slightly outnumbered on Capitol Hill by Democrats, didn't waste any time latching on to the Senate's passage on Aug. 7 of the Inflation Reduction Act. Notably, they cited potential added Internal Revenue Service scrutiny of taxpayers, thanks to part of the bill. Well aware that every federal return filer, even the most honest among us, worries about the IRS taking a closer look... Read more →


Photo by David Boeke via Flickr Democratic leaders in the Senate are still aiming to vote next week on the Build Back Better bill rewrite by Senate Majority Leader Charles Schumer of New York and his intraparty frenemy Sen. Joe Manchin of West Virginia. UPDATE, Sunday, Aug. 7, 2022: The Senate approved the Inflation Reduction Act of 2022 today along a 50-51 party-line vote, with Vice President Kamala Harris casting the deciding vote. The House is expected to consider the measure on Friday, Aug. 12. The 725 revised pages of H.R. 5376, now dubbed the Inflation Reduction Act of 2022,... Read more →


A fully functioning Internal Revenue Service is critical to the success of the United States. That assessment comes from IRS Commissioner Charles Rettig. It's not just a personal view, but part of Rettig's official opening message in the agency's just-released Strategic Plan for Fiscal Years 2022-2026. To get to that point, the report says the IRS' goal must be "putting the interests of our taxpayers first in everything we do." I know. Cynics are clicking away right now. The IRS hasn't had the best record here. To be the agency's devil's advocate — or, as a reader once described me,... Read more →


Charles Rettig was sworn in on Oct. 1, 2018, as IRS commissioner by then-Treasury Secretary Steven Mnuchin. He's now facing questions about audits of two former top FBI officials. The Internal Revenue Service has asked the Treasury Inspector General for Tax Administration (TIGTA) to look into what appear to be unusually timed audits of two former top FBI agents. Now the chairman of the Ways and Means Committee wants TIGTA to also look into the possible involvement of the IRS commissioner in the reportedly random, but intensive, National Research Program (NRP) audits of former FBI director James B. Comey and... Read more →


The Internal Revenue Service is under scrutiny again, this time for conducting unusual and intensive audits of two top FBI officials who were critical of Donald J. Trump. The IRS has asked the Treasury Inspector General for Tax Administration (TIGTA) to investigate how former FBI director James B. Comey and his deputy, Andrew G. McCabe, both were subjected to a rare, compliance research audit that is supposed to random. Congress also will get involved. Rep. Bill Pascrell (D-New Jersey) already, and repeatedly, has taken IRS Commissioner Charles Rettig to task for IRS shortfalls and missteps. In May, during a hearing... Read more →


The Internal Revenue Service's Whistleblower Office marked its 15th anniversary in fiscal year 2021 by making 179 awards to whistleblowers totaling more than $36 million. "Whistleblower claim numbers assigned in FY 2021 grew by 55% year over year, the second highest level of new claim numbers in the history of the program and claim closures also increased by 13%," wrote John Hinman, director of the IRS Whistleblower Office, in the introduction to the office's 2021 Annual Report to Congress, released on June 10. Those tips led to the IRS collecting in fiscal 2021 more than $245 million, which includes almost... Read more →


The 16-year tax fight between a former pizza franchise mogul and the state of Kansas is over. The Sunflower State owes Gene Bicknell $63 million. At least that's the amount that Bicknell, who at one time owned the most Pizza Huts in the world, says he's due from the Kansas Department of Revenue (KDOR) after it erroneously taxed him as a Kansas resident when he lived in Florida. Kansas vs. Florida tax residence status: Bicknell's legal tax residency was at the heart of the multimillion-dollar tax matter. The KDOR said Bicknell was a Kansas resident. Bicknell, however, argued that his... Read more →


Here are this weekend's full Flower Moon eclipse stages. The moon moves right to left, passing through the penumbra and umbra, leaving in its wake an eclipse diagram with the times (Eastern time zone) at various stages of the eclipse. Visualizations by Ernie Wright, NASA Scientific Visualization Studio. Click here for the video version. And if it's cloudy where you live, you can livestream the eclipse. It's Friday the 13th, the only one in 2022. A total lunar eclipse will turn the full Flower Moon red Sunday night. The only thing that could amp up our combined superstitions and natural... Read more →


Don't be an April Fool, or gullible person who's an easily caught fish when it comes to fakes floating around today. And never get caught in a tax myth net, on April 1 or any day. How's your April Fools' Day going? I hope you haven't been tricked into believing some outrageous claims. There even are a few April 1 tax pranks out there on social media. Don't fall for them. If you read or hear something tax-related that sounds a bit sketchy, take the time to check it out with reputable tax sources. To help in this area, here... Read more →