Audit Feed

One of the many reasons that people hate taxes is that after the hassle of filing, then comes the fear that a Form 1040 mistake will mean an audit. The sort-of good news for taxpayers is that the Internal Revenue Service hasn't been auditing as many people in recent years. The agency has had other things to worry about, like doing its myriad jobs with fewer staff and less money. Then there's COVID-19, with added pandemic payments that the IRS is tasked with distributing. Things could be changing, though. More people are getting vaccinated, meaning the end of the coronavirus... Read more →


Technology, not heavy equipment, can close the Tax Gap, according to two former IRS commissioners. The Tax Gap has always been a concern of the Internal Revenue Service, Congress, and taxpayers who pay their taxes. Basically, it's the amount of money the IRS figures it is due from filers, but which it's been unable to collect. Two former IRS execs say they know a way the agency can collect more unpaid taxes. Even better, write former IRS Commissioner Charles Rossotti (he was head honcho from 1997 to 2001) and Fred Forman, former associate commissioner for modernization from 2000 to 2004,... Read more →


When is a tax whistleblower not a whistleblower, at least as far as getting rewarded for certain information? When the Internal Revenue Service determines that added taxes didn't directly come from the whistleblower's, well, whistle blowing. That's what recently happened to a man who altered the IRS to what he thought was unreported, and therefore untaxed, income. The IRS, acting on the tip, reviewed the reported individual's apparently questionable filing. However, the IRS found that the suspect funds were indeed non-taxable. But then the IRS took a longer look at the taxpayer's filing, and found what it determined were improper... Read more →


The Internal Revenue Service and those who want Uncle Sam to go after tax evaders were elated when a bipartisan infrastructure bill included money for enhanced tax collection efforts. Proponents said the beefed-up proposal to close the Tax Gap could bring in an additional $100 billion over the next 10 years in owed but unpaid taxes. However, that funding option has been scuttled. "Well, one reason it's not part of the [infrastructure] proposal is that we did have [Republican] pushback," said Sen. Rob Portman (R-Ohio) during an appearance today on CNN's "State of the Union" program. But there's still hope... Read more →


We regular folks tend to have a complicated relationship with the wealthy. And by complicated, I mean one-sided, unrealistic, and too often reverential. Being aspirational, we love to gawk at what they can get away with because of their money, and dream of one day being in their Manolos and mansions. That's fueled way too many not-really reality shows. Such hopes also are a big reason scammers can convince wealthy wannabes to fall for schemes that peddle false hopes of large tax deductions. In real-life tax reality, these dodges simply are a way to push hopeful taxpayers further away from... Read more →


Here's some good news to kick off you weekend. Most U.S. taxpayers say cheating on taxes is wrong. Of the taxpayers who participated in the Internal Revenue Service's 2020 Comprehensive Taxpayer Attitude Survey (CTAS), 87 percent said it is not at all acceptable to cheat on their income taxes. Even more, 94 percent, believe it is a civic duty to pay their fair share of taxes. Another 91 percent said everyone who cheats on their taxes should be held accountable. The combination online-telephone survey was conducted from Aug. 24, 2020, through Sept. 24, 2020, by Pacific Consulting Group (PCG). PCG... Read more →


Photo of John McAfee shared by his wife earlier this year as part of a Twitter post arguing for his release from a Spanish prison. Last week, millionaire software developer John McAfee was in a Spanish court arguing that he shouldn't be extradited to the United States to face tax evasion charges. Today, MacAfee was found dead in his cell at a Barcelona-area jail. There's no official word on the cause of death. News reports, however, say a preliminary investigation found no signs of foul play. Early indications are that McAfee hanged himself. Hours before the discovery, Spain's National Court... Read more →


While one accused wealthy tax cheat awaits a Spanish court's decision on whether he'll be returned to the United States to face charges, U.S. lawmakers look for ways to snare more rich tax evaders. Or at least get more from them up front. Rather than letting the wealthy have more money to burn, efforts are underway in Washington, D.C., to make it easier to catch rich tax scofflaws, as well as to simply tax them even more. Billionaires who've managed to use tax laws to avoid paying any tax have been getting even more attention lately. Some wealthy people, however,... Read more →


The Biden Administration's proposal to up the Internal Revenue Service budget so it could go after more rich tax cheats got a lot of attention. But the White House also wants to cut down on some audits. That, according to the president's American Families Plan, can be accomplished by giving the IRS more oversight of unregulated tax preparers. The audit/tax pro regulation connection is noted in a White House fact sheet hyping the proposal: These Tax returns prepared by certain types of preparers have high error rates. These preparers charge taxpayers large fees while exposing them to costly audits. As... Read more →


President Joe Biden's proposal to give the Internal Revenue Service an extra $80 billion over the next decade to go after tax cheats — which the ol' blog talked about earlier this month in this post — is getting a lot of attention in advance of his nationally televised speech night. I suspect the current IRS hierarchy is pleased, despite the comments to The New York Times by a former commissioner that an extra $25 billion over a decade would be sufficient. "I'm not sure you'd be able to efficiently use that much money. That's a lot of money," said... Read more →


Rather than heavy equipment, the IRS needs legislative and fiscal help to close its $1 trillion Tax Gap. If you've thought the $441 million figure that the Internal Revenue Service has for years cited as the Tax Gap is too low, you are not alone. None other than the IRS commissioner agrees that there is more tax money that's owed than the agency has been able to collect. A whole lot more. At an April 13 hearing before the Senate Finance Committee, IRS Commissioner Charles Rettig estimated that the actual Tax Gap could be as much as $1 trillion. That's... Read more →


U.S. Treasury Secretary Janet Yellen elaborated on the Biden Administration's fiscal year 2022 budget request for the IRS. (U.S. Treasury photo via Facebook) The White House last week kicked off the fiscal year 2022 budget process by sending a letter to the House Appropriations Committee chairman and issuing a press release on President Joe Biden's funding priorities. The official 2022 discretionary budget request announcement lists 11 areas that also got attention during the presidential campaign, such as education, medical research, housing, and civil rights. In addition to the information issued by 1600 Pennsylvania Avenue, Treasury Secretary Janet Yellen also elaborated... Read more →


Image by Maxime Duprez via Twitter Happy National Pi Day 2021. Or as usurping marketers in the United States also call it Pie Day, even though there is a day designated for the food. Go ahead, get your bargain-priced sweet or savory pies today. But March 14 actually celebrates the mathematical constant pi, or π in the Greek alphabet. In case it's been a long time since math class, that's the ratio of a circle's circumference to its diameter. The trillion-digit ratio is rounded to 3.14. You can find more about pi in one of my earlier March 14 blog... Read more →


The coronavirus has affected the U.S. Tax Court again. Last week, the federal court that presides over taxpayer disputes with the Internal Revenue Service announced that it was going back to mail and other deliveries only. "Effective Friday, October 30, 2020, and until further notice, the United States Tax Court will be suspending its in-person acceptance of hand-delivered documents," according to a press release by the court. Timely mailings only: The announcement noted that in addition to the "timely mailing" of petitions or notices to "comply with statutory deadlines … of appeal," the Tax Court's eAccess and eFiling systems remain... Read more →


Robert Smith surprised the 2019 class of Morehouse College graduates with a pledge to pay off their student loans. Watch the happy moment via Bloomberg Quick Take on YouTube. It was one of last year's best feel-good stories. On May 19, 2019, billionaire entrepreneur and philanthropist Robert F. Smith promised graduates of Morehouse College listening to his commencement address that he would pay off their college debt. The approximately 400 grads at the historically black college in Atlanta were stunned. Then delighted. And the country cheered Smith's benevolence and commitment to making at least a little bit of the United... Read more →


John McAfee's banner image on his Twitter account. If you've waiting until the upcoming October extension deadline to file, chances are you wanted the extra time to ensure that you got your filing right. That's smart. Making mistakes or overlooking tax breaks could cost you, not only money but also time if you end up having to answer Internal Revenue Service questions about your filing. And when an audit — or examination as the IRS likes to call the process — definitely doesn't go your way, you could end up in more trouble. That's what happened to John David McAfee.... Read more →


The Tonight Show host Jimmy Fallon tousles Donald J. Trump's hair during the Republican candidate's Sept. 15, 2016, appearance on the late-night television program. That hair. He spent $70,000 on that hair. Yes, I — and you and everybody — is talking about that $70,000 tax deduction claim by Donald J. Trump on his taxes, which were obtained by The New York Times and detailed in an expansive story this past weekend. Trump's hair has long been a point of curiosity and comedy. He knows it. He even has played it up with voters and on non-Apprentice television appearances. I... Read more →


If you live in Ireland and are thinking of playing a little fast and loose when it comes to taxes, make sure no one is looking. That could be harder than you think. Judging from government statistics, tax evasion reports from the public continue to increase. Last year, nearly 6,000 people filed so-called good citizen reports with Irish Tax and Customs, that nation's version of the United States' Internal Revenue Service. More reports in last five years: These alerts of suspected (or known) tax evasion or other illegal activity have grown exponentially since mid-2015. That's when Irish tax officials began... Read more →


The coronavirus pandemic has not only affected sports leagues, athletes and fans, but also gamblers and the state tax collectors that have come to rely on that related tax revenue. Shortened seasons, revised playoff rounds, cardboard fans in stands. Still, Americans' love of sports and boredom with COVID-19 self-isolation, along with the events being televised, has helped the seasons continue. But the actual reduction in the games mean fewer events on which to place bets. Unless bettors make that up by betting more on the remaining games, associated revenue, tax and otherwise, is likely to fall. And now a new... Read more →


It's been almost a week since Tax Day 2015. That's why today's Tax Form Tuesday is celebrating Form 1040. Actually, this week's feature includes not just the actual tax return you recently sent to the Internal Revenue Service, but also the many forms and schedules that accompanied your return, plus all the associated documents you used to complete it. Yep, we're talking tax record keeping. There's no federal tax law or IRS regulation detailing a preferred way to keep your tax records. That's because every taxpayer situation is different. But the one constant is that you do need to hang... Read more →


You're working on your tax return and discover that you are that close to shaving a few more dollars off what you owe Uncle Sam. Many in this situation are tempted to get creative. Don't. The Internal Revenue Service has seen it all. OK, most of it. The bottom line is that sketchy tax deduction claims are invitations to IRS auditors. Crazy and possibly costly tax break claims: Earlier this year before Tax Day got pushed to July 15 by coronavirus precautions, Washington Post financial columnist Michelle Singletary talked with some tax professionals about the wild write-offs they've seen. Singletary... Read more →