Friday, August 31, 2007

Surviving the IRS Audit

"Most of us manage to get through every tax season relatively unscathed, but others are not so lucky. Nothing strikes fear and panic in a taxpayer's heart like the prospect of a tax audit . What would you do if the IRS picked your tax return for an audit? Here we look at what you can do to prepare for an audit and what kind of penalties you can expect if you've underpaid on your taxes. We also answer the question every taxpayer ponders at least once in his or her lifetime: what are the odds that you'll get singled out for an audit?"

Complete Article can be found here:
http://www.ibtimes.com/articles/20070830/irs-audit.htm

Wednesday, August 29, 2007

Closing the Gap: Why the IRS Wants to Practice Random Acts of Audit

"Bottom Line:
• According to IRS estimates, there is a $345 billion gross "tax gap" for 2001. The tax gap is the difference between taxes the IRS thinks should have been paid and taxes that actually were paid.

• To better understand the tax gap and non-compliance with tax codes, the IRS is resurrecting random audits of tax returns.
• Some 13,000 taxpayers will be chosen for random audits of 2006 returns.
• The IRS will continue random audits for tax years 2007 and 2008."

Complete Article can be found here:
http://knowledge.asu.edu/blog/index.php/2007/08/24/closing_the_gap_why_the_irs_wants_to_pra

Wednesday, August 15, 2007

IRS turns to computers to choose who gets audited and who doesn't

"Taxpayers audited by the IRS aren’t selected randomly by humans any longer. They’re chosen methodically by computers looking, line by line, for irregularities in tax returns. An Internal Revenue Service (IRS) audit can make even an honest and thorough taxpayer worried. In fact though, an IRS audit is simply a review of your tax return to determine how accurate it is."

Complete article can be found here:
http://www.arcamax.com/consumernews/s-215471-609045

Tuesday, August 14, 2007

IRS to institute random audit program

"The IRS is paying particular attention to reporting of income, to wealthy people and especially to flow-through entities such as partnerships, S corporations (a domestic corporation of 100 or fewer shareholders) and trusts"

"An April 16 article in the New York Times said the IRS is auditing the middle class more often, It cited IRS data showing the audits for taxpayers earning between $25,000 and $100,000 nearly tripled to 436,000 taxpayers between 2000 and 2006. That is 1 in 140 taxpayers. One in 59 taxpayers with income over $100,00 are likely to be audited, as are 1 in 16 taxpayers with income above $1 million, the article said."


Complete article can be found here:

http://www.insidebayarea.com/business/ci_6590831

Wednesday, August 8, 2007

IRS drops carrot for the stick to improve effectiveness

"In 2001, the IRS reported a $345 billion tax gap...To close the tax gap, the IRS spent 13 percent more on enforcement in 2006 than in 2004"

"To further minimize the tax gap, the proposed 2008 IRS operating budget of 11.6 billion earmarks 63 percent of the overall budget for collection enforcement."

"Increased IRS enforcement also translates to more civil and criminal actions against taxpayers trying to cheat the sytem. In 2006, the IRS reports that it initiated 3,907 investigations resulting in 2,319 criminal complaints and indictments and 2,019 convictions. That's a conversion rate of 82 percent. The average prison time per conviction and sentencing was just over two years"


Complete article can be found here:
http://www.sun-sentinel.com/news/opinion/sfl-irscol07forumnbaug07,0,953556.story

Monday, August 6, 2007

Prison sentences for financial guru Wade Cook, wife

"U.S. District Judge Thomas Zilly also ordered Cook, 57, to pay $3.75 million in back taxes on roughly $9.5 million of underreported income generated by sales of Cook's books, tapes and seminars.

Zilly sentenced Cook's wife, Laura, 54, to 1-½ years in prison. She is jointly responsible for paying the back taxes."

Complete article can be found here:
http://seattletimes.nwsource.com/html/localnews/2003819531_wadecook03m.html

Friday, August 3, 2007

Father-and-son owners of Cipriani restaurants plead guilty to tax fraud

Complete article can be found here: http://www.courttv.com/news/2007/0731/cipriani_ctv.html?link=eaf

"A Manhattan district attorney said he would not recommend jail time for the famed father-and-son owners of the Rainbow Room and Cipriani restaurants, who pleaded guilty Tuesday to swindling the city and state out of nearly $10 million in taxes."

"Arrigo Cipriani, the patriarch of the Cipriani family restaurants, and his son, Giuseppe Cipriani, the CEO of Cipriani USA, acknowledged in state Supreme Court that they deducted sham royalties from their taxes and knowingly falsified their tax returns. Arrigo Cipriani pleaded guilty to felony tax charges, while his son pleaded guilty to misdemeanor tax charges."

"Under the plea agreement, they will be required to pay $10 million in back taxes. The felony charge of filing false returns carries a maximum sentence of 21 months, and the misdemeanor charge carries a maximum sentence of one year. They are expected to receive probation when they are sentenced Oct. 10."

Wall Street's Lucrative Tax Break is Under Fire

"The most controversial tax break on Wall Street, known simply as the Carry, is not authorized by any law and was never approved by Congress. Instead, it grew quietly over several decades, hinted at but never directly addressed in obscure court cases and arcane regulations issued by the Internal Revenue Service..."

Complete article can be found here: Wall Street's Lucrative Tax Break Is Under Fire