According to the famous quip, taxes are one of the two things you can be certain of in life. But sometimes tax fraud schemes seem to be nearly as ubiquitous as taxes themselves. Earlier this month, a federal jury handed down a guilty verdict against an Orange County man whom prosecutors accused of filing false tax documents on behalf of customers.
The IRS announced this week that it has begun enforcing new rules for tax preparers meant to stop those who have been convicted of tax crimes and those subject to permanent injunctions from continuing to prepare federal returns. The new rule requires federal tax preparers to register with the IRS and obtain a Preparer Tax Identification Number (PTIN), which must be used on all returns and claims for refunds.
No one wants to open their mailbox and discover an envelope from the Internal Revenue Service. Tax payers know that such an ominous package usually means that they have been selected for an audit. The prospect of undergoing an audit can be incredibly nerve wrecking, even for individuals who are completely confident in their ability to file everything correctly.
It's that time of year again...tax time. And while there are no ways to 100 percent guarantee that a business's income tax return won't get audited, there are some steps to take to greatly decrease the chances of a tax audit from happening.
Desperate employers who misclassify workers as contractors in order to avoid paying taxes and benefits could find themselves audited by the IRS and end up paying substantial penalties for failing to pay employment taxes and payroll taxes. Orange County IRS audit attorneys are going to be defending taxpayers more frequently this year over contractor misclassification. The IRS says it will audit 6000 random employers to see how many of them misclassify workers.
As discussed in the previous post, one may consider simply surrendering when the IRS comes calling with news of a tax audit and/or informs you that you owe money to the federal government. Just because the IRS says you owe money, however, it does not mean they are right.
If the IRS comes calling, you will probably wonder whether you should simply surrender or put up a fight. While listening to your gut instincts could help, you'll definitely want to think your next moves through before taking action -- or inaction.
There was a time when the government was more lenient in deciding who would face tax audits and who would be let off the hook. The IRS Reform and Restructuring Act, which was set in place in 1998, shifted focus from tax collection to taxpayer rights. Sadly, no party lasts forever.
As the budget deficit grows by trillions of dollars, year after year, the government will be looking for money anywhere they can find it. This means increased tax audits - especially for those who fall into high income brackets. Owners of businesses, both small and large, will also notice increased scrutiny.