Does the IRS really expect taxpayers who have illegal income to report it on their tax returns? The answer may appear preposterous. But it is still yes.
In our February 11 post, we discussed the prospect that federal budget cuts could affect the ability of the IRS to assistance taxpayers and to enforce tax law through audits and investigations. These cuts, known by the shorthand term "sequester," began taking effect on March 1.
It's been over a month now since a federal judge ruled that the IRS had exceeded its statutory authority in its proposed new regulatory framework for professional tax preparers. As we discussed in our January 30 post, California's state-level regulation of preparers remains in place despite the ruling.
It's bad enough being contacted by the IRS about a potential audit or an ongoing investigation. But in some ways it's even worse when scammers and various bad online actors send bogus e-mails purporting to be from the IRS. These scammers attempt to use the IRS name - or even its logo - to trick people into revealing personal information.
The term "whistleblower" provides an excellent example of the difference between literal and figurative language. Someone who exposes suspected wrongdoing, perhaps because of financial incentives, rarely blows a literal whistle. But the impact of figurative whistleblowers looms large in many different arenas.
Six weeks ago, it was the fiscal cliff that posed broad implications for tax law. Now, there's another Washington term that is having a similar effect: sequester.
The IRS has been progressively tightening its regulation of professional tax preparers. In this blog, we've been monitoring the roll out of such new requirements as competency testing and continuing education for tax preparers.
Constant vigilance! This is the watchword of Mad-Eye Moody, one of the colorful characters in the famous Harry Potter series. It's also a good watchword for U.S. taxpayers with foreign accounts. Constant vigilance is required for such taxpayers because the IRS keeps making changes in how it regulates offshore accounts.
The IRS is tightening its regulation of professional tax preparers. The new requirements overseen by the agency start with an electronic registration system in which each preparer must apply for or new a Preparer Tax Identification Number or PTIN. But they also include other components, such as competency testing and continuing professional education.
The IRS doesn't always get it right - and neither do federal prosecutors who bring charges of tax fraud. Fortunately, taxpayers or tax professionals accused of wrongdoing have the right defend themselves against criminal tax evasion charges.