Discussion:The Top 5 of the Dirty Dozen List of Mistakes
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| 2007 November 15 | |
| After receiving the November, 2007 issue of the FEDERAL TAX ALERT from the National Society of Tax Professionals and reading this article, I felt that I really needed to pass this information along. And trust me, it is the most valuable information that you can receive for the 2008 tax season or for any tax year.
Checkout ”Ten Ways To Annoy An IRS Agent” first. http://www.youtube.com/watch?v=5NkG2Ho39iU “The IRS announces each year what they are going to be looking for in their annual “Dirty Dozen” report. They also make the audit statistics available in order to see that they are auditing taxpayer’s returns. The following are the top five red flags for audits. They include: Location. Where you live makes a difference in determining whether you are more at risk from an audit. You are more likely to get an audit if you live in one of these places: Los Angeles, North Central District (ND, SD, MN), Southern California, Northern California, Manhattan, Central California, Brooklyn, Southwest (AZ, NV, NM), South Florida and Houston.
Under-reporting Income. the IRS receives copies of your K-1s form Limited Partnerships and S Corporation, 1099s from interest, dividends and sales, and W-2s. If you do not report these items on your return, or you report a different amount, your return will get pulled for inquiry. Who Files Your Return Matters. If you have a complex return and prepared it yourself or if your return was prepared by someone on the IRS’s problem preparer list, you are more likely to be audited.” The most important advice that you need to remember is “once you have been audited, then you cannot go back and amend a return for changes”. Once the audit has taken place you will have to live with the IRS’s decision and finding. And once that happens, most folks find themselves having to solicit the help of Tax Resolution services such as Effectur, Inc to help with audit representation and negotation of payments. “What is the difference between a taxidermist and a tax auditor?” The taxidermist takes only your skin!”………… S. Raines, Sr. Financial Advisor/Tax Preparer | |
Wkstaxprep (talk|edits) said: | 15 November 2007 |
| As far as i understand, the rational behind auditing low to middle income earners is because they are the majority of returns and the IRS can target similar items on many returns(such as eic). even a small assessment of 2K for a million returns is more revenue for IRS than an assessment of 10K on 1,000 returns for high earners.
That's what a former state auditor told me once but who knows....??? | |
| 15 November 2007 | |
| Another more dastardly reason might be that low to middle income earners are less likely to have their returns professionally prepared, less willing to pay for representation, and less able to defend themselves. | |
| 15 November 2007 | |
| The numbers are heavy for low income taxpayers due to the fact many audits are for non filers. There income is zero before the audit starts. | |
| 18 November 2007 | |
| Ironically, from what I hear, some of the low to middle income earners DO have their returns prepared (maybe not professionally)and DO telephone the preparer or tax service for representation only to hear either the person who prepared their return is no longer with the company, followed by a price quoted so high they know the person couldn't afford to have representation, or, the tax service has closed up and moved to another unknown location. As far as not being able to defend themselves, their is no defense for bogus returns which show for example a Sch C when there is no Sch C business or for a Contribution deduction when there was no such Contributions made thus, no substantiation to defend themselves even if they wanted to.
If auditing these kinds of returns not only leads to finding the unscrupulous preparers who love to prepare returns of low income people, especially ,people who have no knowledge of taxes, don't ask questions regarding business expenses or deductions, because they just look at the refund and sign on the dotted line. Unfortunately, they are responsible for the contents. Had the people paid to have their return prepared by a knowledgeable accountant or other tax professional, they would see it was well worth it considering the additional taxes, interest and/or penalties the IRS may be assessing. Also it leads to people who have received refunds they weren't entitle to at all I don't have a problem with that | |
