IRS Targets?

[kcjenkins]

Findings from a study conducted by the National Taxpayer Advocate, an internal IRS office, suggest that the tax collection agency has determined small businesses to be the most likely tax scammers, raising the propensity that they will be most heavily targeted for audits.

http://personalliberty.com/2013/04/16/irs-likely-to-target-small-businesses-in-key-regions-for-audits/

[SCL]

and your undeclared point of view from your biased right wing web site is?..."unfortunately, the Internal Revenue Service could make it harder than ever this year to run a small business."...or that small business "tax scammers" should not be "heavily targeted" by the irs for tax audits?

the real story..."heavily targeted" at a 1+% total tax return audit rate is still a very small % audit rate.

"Findings from a study conducted by the National Taxpayer Advocate, an internal IRS office, suggest that the tax collection agency has determined small businesses to be the most likely tax scammers, raising the propensity that they will be most heavily targeted for audits.

The IRS says that it does not base audits on factors like geographic region or employment type, but chooses audit victims according to how they score on its Discriminant Inventory Function (DIF).

“If your return is selected because of a high score under the DIF system, the potential is high that an examination of your return will result in a change to your income tax liability,” states an IRS publication.

But the National Taxpayer Advocate information shows a pretty clear relationship between the 1 percent of people the IRS audits each year: They often get paid in cash, they own small businesses and they live in wealthy parts of the Nation.

Reportedly, sole proprietors in New Carrollton, Md.; College Park, Ga.; Beverly Hills, Calif.; and Newport Beach, Calif., are in particular danger of receiving an audit this year. Those regions harbored the highest number of tax cheats in 2009, according to the study.

Americans throughout the Nation who own construction companies or real estate rental firms are also likely to come under increased IRS scrutiny."

[kcjenkins]

Please do not put words in my mouth, or ASSUME that you know my opinion, even when you admit it is " your undeclared point of view from your biased right wing" POV. I have NEVER suggested that the IRS should not go after cheaters. In fact, I have often griped about them not going after cheaters that their own software should make easy to find. Today, there is a good article in Accounting Today, about that very thing. This is from the Treasury Inspector General for Tax Administration, not generally called a "biased right wing web site".

IRS Not in Compliance with Improper Payments Law

The Internal Revenue Service was not in compliance with all requirements of a 2010 law that increased agency accountability for reducing improper payments in federal programs, according to a new report that cited the high rate of improper payments for the Earned Income Tax Credit.

The report, released publicly Monday by the Treasury Inspector General for Tax Administration, found that the only program the IRS has identified for improper-payment reporting is the Earned Income Tax Credit Program. The IRS estimates that 21 to 25 percent of EITC payments were issued improperly in fiscal year 2012. The dollar value of these improper payments was estimated to be between $11.6 billion and $13.6 billion.

However, TIGTA auditors found that the IRS has not established annual improper payment reduction targets for the EITC and has not reported an improper payment rate of less than 10 percent. This is the second consecutive year that the IRS has not been in compliance with IPERA.

The Improper Payments Elimination and Recovery Act of 2010, also known as IPERA, increased agency accountability for reducing improper payments in federal programs and required agencies to identify programs that are at high risk for improper payments. Agencies are also required to set annual improper payment reduction targets for high risk programs.

TIGTA initiated its audit because IPERA requires TIGTA to assess the IRS’s compliance with improper payment requirements. The objective of its review was to assess the IRS’s compliance with IPERA.

The Treasury Department identifies the programs for which the IRS must assess the risk of improper payments. The IRS compiles the required information and forwards it to the Treasury for inclusion in the department’s agency financial report. TIGTA's analysis of the information provided by the IRS to the Treasury indicated that the IRS is not in compliance with all IPERA requirements.

“Although the IRS has implemented a number of programs over the years to address Earned Income Tax Credit improper payments, our auditors have found that the IRS faces significant challenges to becoming compliant with the Improper Payments Elimination and Recovery Act,” said TIGTA Inspector General J. Russell George in a statement.

Specifically, the process the Department uses to assess the risk of improper payments within its bureaus does not effectively assess the risk of improper payments in tax administration, TIGTA found. In addition, the ever-changing population of EITC claimants makes it difficult for the IRS to gain lasting improvements in EITC compliance through outreach, education and enforcement.

TIGTA made no recommendations in this report. However, prior reports contained five specific recommendations for improvement to which the IRS agreed. The prior reports evaluated the IRS’s compliance with improper payment requirements contained in Executive Order 13520 and the adequacy of the IRS’s fiscal year 2011 assessment of the risk of improper payments.

In response to the report, IRS CFO Pamela J. LaRue pointed out that the report had stated, “ased on materiality, it is reasonable to omit [Earned Income Tax Credit] underpayments when computing the Fiscal Year 2012 improper payment rate. However, the IRS should continue to evaluate the significance of EITC underpayments annually and ensure that underpayments are included in its annual estimate of the EITC improper payment rate if warranted.”

“The IRS will continue to evaluate the significance of underpayments and report on that in the Fiscal Year 2013 estimate,” she said.