Audits

A Date With the IRS

The internet has transformed so much of how we live our lives. We find our news online, find books and music online, and find travel bargains online. The internet has even transformed how many of folks find romance, with a dizzying range of sites for suitors of all interests.

Now there's a new site called WhatsYourPrice.com that offers a decidedly commercial twist on the age-old quest for true love. Their romantic slogan: "Buy a First Date With Anyone." Generous daters (mostly men, of course), post what they're willing to pay for a date. Attractive daters (mostly women), post what they want to get for a date. As one woman from the site said, "If it's going to be a big, huge waste of time, at least I'm going to get paid for it . . . . A lot of these guys are wealthy gentlemen, and I think my time is as valuable as their time."

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Will Taxes SAVE This "Celebrity"?

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We're all used to seeing the high and mighty brought down by taxes. Actor Wesley Snipes is currently sitting in federal prison for failing to pay tax on millions of dollars of movie income. Representative Charlie Rangel was censured by the House of Representatives, in part for failing to report $75,000 of rental income on his villa in the Dominican Republic. Even Florida mom Casey Anthony, on trial for the murder of her daughter Caylee, faces a $68,520 IRS lien, apparently for failure to pay tax on money paid by ABC for family photos and video. (Maybe she thought paying her lawyer was more important than paying her taxes?)

Would it surprise you, then, to learn that one of our highest-profile scoundrels is counting on the IRS to help get him out of trouble?

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IRS Announces Extensive Employment Tax Audits; Is your contractor really an employee?

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As you can imagine, with the economy still reeling and tax collections dropping the importance of the governments' oversight of our system of taxes becomes ever more critical. From both the federal and state levels we continue to read about new and improved compliance measures being put in place. Take one of the recent announcements at the end of 2009 from the IRS as an example.

The IRS has announced it will conduct intensive employment tax audits under its National Research Program (NRP) starting in 2010. This is a multi-year program with random audits scheduled to begin in February 2010. The IRS has said it will audit U.S. companies under this program. The NRP is a study and data collection project that helps the IRS update its noncompliance estimates and update its computer-based audit programs. "Normal" audits do not yield as valuable compliance data as random audits because the IRS, in normal audits, is intentionally targeting the taxpayers they believe have noncompliance problems. NRP audits on the other hand, are random to allow the IRS to statistically measure the total amount of noncompliance in a specific area. The IRS then uses this data to update its computers and estimates of the tax gap—the difference between total taxes owed and the amount actually paid by taxpayers.

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IRS to simplify, or try too, taxpayer notices

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If you’ve ever received a letter or notice from the IRS you know first-hand how confusing and confounding  the information presented can be.  All this while it has generally been my experience that the IRS really is not trying to confuse things with how they structure their correspondence -- quite the opposite actually. The IRS really is doing what it can wrestling with implementing wildly complex tax laws created not by their doing, but by the doing of our legislators in Washington -- while at the same time trying to be clear and concise to the taxpayer.

To this dilemma there just may be a little hope on the horizon.

The IRS recently announced it will will be sending out newly redesigned, less confusing notices to taxpayers that aim to improve the way it corresponds with its core constituency.

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You’re being audited and you’re missing records, now what?

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So you’re facing an audit and your records, or a portion of them, have gone missing. Or, you’re just a normal entrepreneur chasing from one project to another and your record keeping habits were just, well, not habits at all. You may not be able to produce receipts, bills or other written documentation for all the items on your tax return. That’s when you must turn to reconstructing your records or gathering together the best proof you have for the IRS.

The law does not require perfect record keeping habits—it’s just simpler that way. It’s perfectly legal to reconstruct your records in any way to provide adequate evidence that what you claimed on your return was, in fact, accurate.