Audit Feed

The United States avoided defaulting on its debt, thanks to last-minute deal reached by President Joe Biden and House Speaker Kevin McCarthy and grudgingly agreed to earlier this month by Congress. Park of the package was a $21.4 billion cut to money the Internal Revenue Service was supposed to use for tax enforcement. The agreement called for an immediate $1.4 billion reduction, plus the loss of $20 billion over the next two years, most of that coming from the nearly $80 billion in extra funding the IRS was given as part of the Inflation Reduction Act. Critics of the hit... Read more →


Automation often makes life easier, until it doesn't. Some very surprised California taxpayers learned that lesson this week. So did the Internal Revenue Service. The IRS' automated notice issuance system sent most California taxpayers letters saying that they had missed their filing deadline and owed the U.S. Treasury. The IRS was wrong. The agency's mistake understandably freaked out Golden State residents whom the IRS previously granted a new Oct. 16 due date. The extra time was allotted so the taxpayers could deal with problems caused by widespread natural disaster across the state earlier this year. The IRS issued a mea... Read more →


Spring is the traditional time to clean out all the junk you've accumulated. Our neighborhood has a community yard sale the first weekend in May. Some of what doesn't get sold ends up going to local charities. That's a good way to dispose of clothing and household goods that are in good condition and, if you itemize, claim a tax deduction. Follow donation rules: The state of the donated goods is just one of the conditions you must take into consideration, especially if you're planning to deduct their value as an itemized charitable gift. The other key donation deduction factor... Read more →


In February 2022, the Internal Revenue Service announced that it was suspending several automatic tax notices. The move was prompted in large part by the massive backlog of tax filings that piled up when the agency closed offices as a precaution early in the COVID-19 pandemic. Now, taxpayers can expect those mailings to resume, starting with 2022 balance due notices. Current CP14s going out first: IRS Deputy Commissioner for Collection and Operations Support Darren Guillot, who was part of an American Bar Association tax conference panel in Washington, D.C., last week, said that approximately 5-to-8 million CP14 Notices, should start... Read more →


Photo by Sharon Waldron on Unsplash Every year after Tax Day, I get emails from my financial institutions and local office supply stores about upcoming shredding days. On these dates, I and all my neighbors and fellow customers can bring our documents we would like turned into confetti to prevent identity thieves from using any of the information. That's a welcome service. But there are some documents, especially tax-related ones, that you need to hang onto for a while. Here's an overview of the tax material you need to keep and for how long. Your 1040: The main record everyone... Read more →


The Treasury Department and Internal Revenue Service today released an extensive plan on how the tax agency will spend the nearly $80 billion in added funds it received in the Inflation Reduction Act (IRAct). New IRS Commissioner Daniel Werfel, in the introduction to the 150-page Strategic Operating Plan, said the plan is structured to achieve the following five objectives — Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible. Quickly resolve taxpayer issues when they arise. Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address... Read more →


Click image to read full indictment. April 4, 2023, is one of those "where were you when…" days. Many of us were in front of our televisions or computer screens watching the formal criminal arraignment of a former U.S. president. Donald J. Trump pleaded not guilty today to 34 felony counts of falsifying business records. "True and accurate business records are important everywhere, to be sure. They are all the more important in Manhattan, the financial center of the world," said Manhattan District Attorney Alvin Bragg at an afternoon press conference in which he discussed why his office brought the... Read more →


UPDATE, March 12, 2023: Congratulations to all those who won Academy Awards tonight, especially the big winner, "Everything Everywhere All at Once." The movie, known on social media as #EEAAO (or #EEAO if you don't want to include the preposition) proved that this year's major Hollywood event definitely wasn't your grandparents' Oscars. The wildly imaginative film, which featured a tax audit, won best picture. Three EEAO stars, Michelle Yeoh, Ke Huy Quan, and Jamie Lee Curtis, won acting Academy Awards. And original screenplay and directing Oscars went to The Daniels, Daniel Kwan and Daniel Scheinert. Jamie Lee Curtis, far left,... Read more →


UPDATE, Monday, March 13, 2023: Daniel (Danny) Werfel began work today as the 50th commissioner of the Internal Revenue Service. He was confirmed by the Senate on March 9, and sworn into office this morning by Deputy Commissioner for Services and Enforcement Doug O'Donnell, who served as acting commissioner since November. Werfel's term will run through Nov. 12, 2027. "After taking the oath of office a short time ago, I feel incredibly grateful and humbled to have the chance to lead such an amazing group of dedicated public servants at a pivotal moment in IRS history," Werfel told IRS employees.... Read more →


The IRS has implemented a document upload process to deal with certain tax notices that looks so easy, you shouldn't need your cat's, or any other, help to use it. (Photo by Ruca Souza) I've spent the last few days online, downloading documents we need to file our tax return, which I'll eventually do electronically. I am not alone. More of us handle most of our lives' issues online. In addition to taxes, we shop, bank, watch entertainment programs, and communicate with friends and family digitally. Now the Internal Revenue Service has expanded our electronic tax interaction options to help... Read more →


Photo by Nataliya Vaitkevich You tried doing your own taxes last week when the 2023 filing season officially opened, with tried being the operative word. It didn't take long to realize that you need more help. You didn't feel quite comfortable with the tax software you tried. And your tax circumstances are a bit more complex than those typically handled by the various tax preparation chains. So now you're looking for more professional, personal tax assistance. Be ready to wait: Good for you for admitting that your taxes are too important and confusing for you to deal with on your... Read more →


If you dabbled, or more, in innovative financial assets like crypto in 2022, then one of the most important lines on your 2022 tax return shows up early. The section just below where you enter your (and, if married filing jointly, your spouse's) name, the Internal Revenue Service asks: At any time during 2022, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)? (See instructions.) See more tax forms and more about them at 2022's... Read more →


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 →