Discussion:IRS Could Use Mortgage Data to Pursue Tax Evaders

WTH! Is this new information for the IRS?!? Has the IRS forgot about economic reality audits? This is like me telling my son to wipe after he does #2s.

I have no interest in joining the dark side, but the IRS could gather 50 well-seasoned tax preparers, pay them $200K each, and these guys and gals would reap 100x their costs in additional tax revenue.

I think the more important fact garnered here is that people are not filing when they discover that their pile of mortgage interest does not wipe out tax liability.

While my practice doesn'thave that, I understood his point perfectly. kevins point is spot on.

You see a tax return and shake your head.

What about all the "off the book" employees etc....

A random spot check of employees at most small restaurants would uncover millions!

These people have been the low hanging fruit for too long.

Let's turn up the heat elsewhere for a while. Let's turn up the heat where the real money is. I can think of a few possibilities (1065 LLCs the "do anything you want" entities).

6. Section 7602(e) prohibits the service from using financial status or economic reality techniques to determine the existence of a petitioner's unreported income unless the Service has a“reasonable indication that there is a likelihood of unreported income.” Section 7602(e) concerns the use of indirect methods to reconstruct the taxpayer's income through circumstantial evidence. The statutory notice should be reviewed to determine whether the Service used an indirect method. If an indirect method was used, the Field attorney must review the administrative file to ascertain whether the Service had a reasonable indication that the petitioner was underreporting his or her income prior to utilizing the financial status or economic reality audit techniques. If there is no evidence in the administrative file to show the Service had such an indication, serious consideration should be given to conceding the case. The Field attorney should contact the revenue agent to determine if the agent had any evidence of unreported income not contained in the administrative file before conceding the case, and should consider seeking legal advice to confirm the proposed position in the case..............................

They've got to jump through a lot of hoops.

Since the reorganization, update of computers, a different Congressional majority and a budget shortfall, everyone is pushing IRS to go out and do more. Some of us have already seen it in more audits for Backup withholding on missing, incorrect or not issued TINS, Officer Comp in S-Corps, S-Corp with no 941's, Tool Rental Plans, referrals from State Employment Commmissions, etc

The IRS probably reasons: yes, but we can bring in some money fast with the simple Scd. C audits. The problem is that with such low audit rates on the more complicated returns (e.g. 1065s) you are creating a moral hazard. Who knows what's going on with those returns?

What about auditing a 1041 more often? Just to keep people on their toes.

I have seen returns that a half - good prepaper would not let through.

Some type of Licensing is critical in my view.

Best I can do is trade for an occasional massage....and then, since I'm terrified of going to jail for tax evasion, I report the $ 200 in income anyway :-) I do sleep well at night tho (the tequila helps).

I guess in a democracy, we never want the police to be too good. But, you don't have to be good to skeer the bejesus out of someone. Lord, there's some of the rich that need to be "Skeered Straight". I'm fired up now, and I'm not supposed to do any preaching until tommorrow night, it always happens like that.

What they need is a button on the computer down at IRS central that says "Get Lucky", only the highers up can push it (though I would let the janitors push it sometimes as well, maybe on Labor Day). When pushed, it randomly selects 50,000 returns of all flavors, and spews out audit notices for postal delivery. Not even Nina Olsen could stop the computer once the button was pushed, this is the equivalent of the doomsday button (for some of the high rollers out there: Ask not for whom the bell tolls!).

When one of the top dogs over at HQ get's mad, instead of kicking his dog, or yelling at his wife, he can just push the "Get Lucky" button. Foreign dignitaries could be invited to push the button when in town for a steak dinner.

P.S. I also think it would be a good idea to print store coupons on the back of IRS correspondece, this way clients would actually open them. "Coupons Enclosed".

Of course the downside of this (sarcasm) would be that Congress would not be able to do their social engineering through the Tax Code.

California did that with Prop 13 and there recently has been talk of leaving this program in place for residences but repealing it for commercial property.