David Kirkpatrick

September 13, 2010

September 1, 2009

IRS to use mortgage data to track down cheaters

The IRS has really been stepping up enforcement over the last couple of years. Sometimes (rarely really) you get the warm and fuzzy IRS, other times you get the buzzsaw.

I do agree with the point made below on the odd timing of this potential tax cheat catching tool.

From the link:

The Internal Revenue Service might scrutinize mortgage interest data more closely to help catch tax cheats, after prompting from an IRS auditor.

The tax collector said it will study whether it should make greater use of mortgage interest data provided to the IRS by banks, to target audits against individuals who do not file tax returns, according to a letter released Monday by the Treasury Inspector General for Tax Administration.

However, a stepped-up IRS focus on homeowners whose reported income falls below their mortgage interest obligations could attract criticism at a time when many have fallen behind on mortgage payments.

August 21, 2009

Watch out for correspondence audits from the IRS

I’d like to see some legislation taking this ability away from the IRS. Too many problems, to many moving parts, not enough personal interaction and very clearly not enough protection for the taxpayer.

From the link:

A new report from the Treasury Inspector General for Tax Administration lends support to growing complaints about the Internal Revenue Service’s big audit-by-mail program.

The IRS has increasingly relied on these correspondence audits, focused on one or two narrow issues, to maintain its audit coverage of normal taxpayers as its auditor corps has shrunk. Taxpayers are sent a letter that, for example, says their charitable or un-reimbursed employee business deductions will be denied and a certain amount of extra taxes assessed unless they provide acceptable documentation supporting the deductions within 30 days.

But the TIGTA report concludes that the correspondence audit results reported by the IRS are “inaccurate and overstated” and that there are operational problems with the program, including significant mail processing delays. These delays can cause taxpayers who respond with documentation within the required time to be assessed extra taxes because their responses don’t get to the right IRS employee in time. Eventually, they may be able to get those taxes abated through an “audit reconsideration,” but the average time to conclude one of those is 159 days, TIGTA estimates.