tax-tips
The IRS is coming to grips with a $346 million budget reduction including enforcement cuts of $160 million. I wonder if it is due to its targeting certain political organizations. If so, it wouldn’t be the first time.

After creating an unflattering print of President Nixon with the caption “Vote for McGovern,” Andy Warhol was audited every year for the rest of his life.

The enforcement cuts will result in 46,000 fewer individual and business audit closures. Since there is a hiring freeze, the IRS will lose 1,800 enforcement personnel through attrition in 2015. Reduced enforcement staffing will result in a loss of revenue for the government of at least $2 billion.

The IRS service expectations for 2015 are that it will be able to answer only 43 percent of the calls received. Taxpayers who get through can expect to be on hold for at least half an hour and considerably longer at peak times.

The IRS will answer far fewer questions than in the past, confining itself to just basic questions during the filing season. For those taxpayers on extension, the IRS will not answer any tax questions at all, leaving the 15 million taxpayers who file extensions unable to get answers to their questions by calling or visiting IRS offices. Tax-return preparation assistance has ended.

The IRS continues to improve its techniques for selecting returns for audits with the focus on certain priority areas. Taxpayers with foreign bank or investment accounts are receiving heightened scrutiny, as are beneficiaries of foreign trusts. New capitalization and repair regulations will require many taxpayers to file Form 3115, for a Change of Accounting Method. The IRS has indicated there will be audits for those businesses failing to file this form when required.
There has been an epidemic of persons filing fraudulent returns with other taxpayers’ Social Security members and receiving refunds based on false information.

The IRS has instituted procedures for dealing with identity theft. If you suspect identity theft, I suggest you talk with a tax professional to advise you of the procedures to follow. You will need to file Form 14039 and obtain a PIN number in order to file your return.

A very challenging tax year is shaping up with last-minute tax changes on Dec. 19, implementing of the Affordable Care Act provisions and changes in repair and capitalization regulations.

Similar Posts

  • | |

    Tax Tips: Charitable contributions …

    Americans are the most charitable people in the world, as evidenced by records of our annual charitable giving. Congress has been very generous in the passage of laws regulating deductions for charitable giving. Consult IRS Publication 526 for regulations governing the many aspects of charitable giving and the required documentation. In order to be deductible,…

  • Tax Tips: Tax update

    Congress has been gearing up for the 2012 elections so no major tax legislation was passed in 2011. The bill passed in December 2010 extended the Bush tax cuts through 2012. You can expect the battles on how to improve our tax code to resume after the fall elections. But several interesting developments on other…

  • Tax Tips: Foreign asset reporting – watch out

    Several filing requirements can apply when you own or are a beneficiary of foreign financial assets. These forms report on the specific assets themselves and are information returns versus income tax returns. However, the penalties for failing to file them are truly draconian, many starting at $10,000. The rules are complex, in some cases overlapping,…

  • |

    Tax Tips: Obamacare hits tax returns …

    The Obamacare mandates become effective on our 2014 tax returns. The Affordable Care Act (Obamacare) requires that you have health coverage that meets the law’s requirements by 2014 or pay a penalty. Your spouse and dependents must also be covered or you may be subject to a penalty. However, there are 33 exemptions from the…

  • Tax Tips: Tax myths

    In an 1939 BBC broadcast, Winston Churchill called Russia “a riddle wrapped in mystery inside an enigma.” This would also be an apt description of our tax code. Our tax laws are written piecemeal year after year by lawmakers unfamiliar with our existing body of tax laws and with little thought toward coherence or consistency….