Your risk of getting a tax audit ‘is way up’
IRA takes tougher stance on returns
Based on the amount of income that Americans fail to report every year - $345 billion, according to one government report - millions of Americans have little fear of a government audit.
But tax pros and government reports suggest the Internal Revenue Service is gradually shedding its “kinder and gentler” attitude […]
IRS reports increase in audits and taxpayer services for 2007
AccountingWeb.com has recently posted the following:
During 2007 the IRS audited 84 percent more returns of individuals with incomes of $1 million or more than during 2006. Overall, enforcement revenue reached $59.2 billion, up from $48.7 billion in 2006 and nearly $34.1 billion in 2002.
Highlights of the enforcement and services numbers for fiscal year 2007, which […]
Washington, IRS more likely to audit millionaires
Washington IRS more likely to audit millionaires
There’s at least one advantage to not being a millionaire — less chance of being audited by the Internal Revenue Service.
The tax agency said Thursday that in the 2007 budget year it audited one out of every 11 with incomes of $1 million or more. Among those with […]
Unreported Income - Attorney Client Privilege
Attorney Client Privilege - US v KovelIf retained by an attorney, client accountants may receive the benefits of Attorney-Client privilege. In United States v. Kovel, 296 F.2d 918 (2d Cir. 1961), the Attorney-Client privilege was extended to accountants retained to assist the attorney in understanding taxpayer’s financial records.
The IRS Restructuring & Reform Act of 1998 […]
Unreported Income: Tax Preparer (CPA) Civil & Criminal Penalties (Summary)
Taxpayers who have unreported income, may subject their tax preparer (CPA) to up to 9 years imprisonment, with the following penalties:
Tax Preparer Penalties1. Penalty for causing an understatement of tax on a return (IRC § 6694), either: greater of ($1,000/or 50% of Income Derived), or if willful: ($5,000/50% of Income Derived)2. Penalty for aiding and […]
Unreported Income: Fraudulent Failure to File Tax Returns
In order to avoid the 75% penalty for fraudulent failure to file tax returns the tax payer must establish:
1) The delinquent filing is due to reasonable cause.2) The delinquent filing is not due to willful neglect.If both elements are established the failure to file penalty does not apply.
Penalty: Failure to file tax return
To establish that […]
Unreported Income: Criminal Penalties: Tax Preparers
Clients, with unreported income, may subject tax preparers to criminal penalties, fines, costs of prosecution and up to 10 years imprisonment (2 felonies, 2 misdemeanors):
1. Any person who willfully attempts in any manner to evade or defeat any tax or payment of any tax imposed by the Code is guilty of a felony.
A person convicted […]
Unreported Income (IRS): CPA Liability
The IRS has a new method for identifying returns with a high probability for unreported income (i.e., Unreported Income Discriminate Index Function (UI DIF)). Unreported income is both civil tax fraud and criminal tax evasion.
Taxpayers who have unreported income may be subject to up to 6 years in prison, 100% penalties and fines, and expose […]
PE shops escape tax man this year, but he’s coming
PE shops escape tax man this year, but he’s coming.
“Rangel’s $1 trillion ‘mother of all tax reform bills’ is close to seeing light of day so that long battle for next year can begin.All indications are that a controversial bill to tax private equity carried interest as regular income will have to wait until 2008. […]
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 […]
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