Did you know the IRS has three kinds of audits? The most common is the correspondence audit, where the agency challenges your return in a letter. The next most common is the office audit, where you are invited to come to the nearest IRS office to defend your taxes. Finally, there is the field audit, where an IRS agent shows up at your doorstep to check on the details of your return.
In April, the nonprofit investigative news service ProPublica revealed that the IRS spends at least as much time auditing the working poor as it does the wealthiest 1% of Americans. On the surface, that seems fair enough. We shouldn't avoid auditing the poor just because they're poor. Neither should we avoid the rich.
What will tax reform look like? That is a major question swirling in the political air in Georgia and every other state of the nation. No one in a position of making such policy is willing to provide much in the way of clarity on the subject. They apparently want to keep their options open. Who can blame them? No matter what action follows, someone will be upset. There is one thing that analysts say law and policy makers should try to keep top of mind - the gig economy.
According to a recent survey, over a quarter of all Americans are working a job in the gig economy but not declaring it on their taxes. That's around 69.8 million people and about $214.6 billion in tax revenue going undeclared.
Last time, we mentioned a legislative proposal that would make significant changes to tax law, changes that are very likely to have a significant negative impact on charitable giving. It isn’t clear yet how far the proposal will advance—there are certainly opponents—but if it does, the effects could be widespread, hitting nonprofit organizations hard.
Charitable giving is something many people do in order to support a cause they believe in or to help those in need. For some people, charitable giving is sporadic or occasional, while others give regularly on an annual basis. However people give, one of the benefits of giving is that donations are tax-deductible. Tax deduction is only worth it, though, if taxpayers’ deductions exceed the standard deduction.
For businesses, correct and timely filing of taxes is an important, ongoing task. Different businesses are, of course, taxed different ways, and it important for every business to establish policies and procedures for documenting tax-related matters and for correctly completing filings on time.
In recent posts, we've been looking at potential avenues of relief available to spouses who come under IRS investigation based on a discrepancy in a tax filing. As we've noted, innocent spouse relief and separation of liability are exceptions to the general rule that spouses are both fully liable for misstatements on joint tax returns, but these forms of relief are only available when certain conditions are met.
We’ve been looking in recent posts at the difference between tax fraud and negligence, and emphasizing the importance of taxpayers working with an experienced attorney when the IRS decides to investigate reporting discrepancies.
In our previous post, we began looking at the difference between tax fraud and tax negligence. As we noted, the difference is between being mistaken or careless, or perhaps reckless, and intentionally attempting to deceive the IRS in tax reporting.