by Scott Dine | Accounting News, Uncategorized
WASHINGTON (AP) – If you earn less than $200,000 a year, there’s a strong chance you don’t have to worry about an Internal Revenue Service audit. But if you make more than $1 million annually, the odds have been rising that you’ll be hearing from the tax man.
The IRS released figures Thursday showing that 12 percent of millionaire earners were audited last year. That’s up from 8 percent in 2010 and 6 percent in 2009.
The data shows that for those making under $200,000, the rate has stayed steady at around 1 percent in recent years.
IRS officials said the growing audit rate for high earners is aimed at demonstrating that the tax code is being enforced fairly and is unrelated to President Barack Obama’s recent proposals to boost taxes on the rich. The White House and congressional Democrats are expected to continue taking similar populist stances with the approach of this November’s presidential and congressional elections.
Steven Miller, deputy IRS commissioner for services and enforcement, said in an interview that the higher audit rates for the highest earning individuals are designed to “assure that those at the lower end of the spectrum know that those at the higher end of the spectrum are subject to the same rules and enforcement as everyone else.”
“We base our audit decisions on tax issues, nothing else,” said IRS spokeswoman Michelle Eldridge. “We don’t play politics here.”
Four percent of individuals earning $200,000 and up were audited in 2011, up from around 3 percent the previous five years.
The IRS only provided data for three categories of individuals’ income: those earning under $200,000 annually, those making $200,000 and up and those earning $1 million and up.
Overall, the agency says, it audited nearly 1.6 million of 141 million individual returns in 2011, or just over 1 percent. That rate has been growing gradually and is almost double the 0.6 percent audited in 2001, the IRS said.
Only about a quarter of IRS’ audits involve dreaded meetings between taxpayers and agency officials. The rest are carried out using letters.
In 2010 — the most recent year available — more than 8 in 10 individuals audited ended up paying additional taxes.
Altogether, IRS enforcement efforts — including audits, legal action and other tactics — resulted in an extra $55 billion being collected. That’s down almost $3 billion from 2010, which Miller blamed on a falloff in estate taxes and corporations writing off their losses.
That $55 billion was a small part of the $2.3 trillion the agency collected in revenue last year.
The IRS also audited a greater proportion of large corporations than smaller ones, the data shows.
Last year, 1 percent of corporations with assets under $10 million were audited. Among corporations with assets of $250 million and up, 28 percent were audited.
The IRS figures also showed that:
— In 2011, the agency garnisheed wages or seized money from bank accounts 3.7 million times, put liens on property 1 million times and seized 776 pieces of property.
— Seventy-seven percent of individual returns were filed electronically last year, up from 69 percent in 2010.
— Seventy percent of callers to IRS taxpayer information telephone lines got through, slightly less than the 74 percent who reached someone in 2010. Miller attributed that to budget cuts to the agency.
— The information IRS officials dispensed over the phone to taxpayers was accurate 93 percent of the time, the same as the previous year.
— The IRS website, http://www.irs.gov, was visited 319 million times in 2011, a slight increase.
The data was presented by federal fiscal years, which begin on the previous Oct. 1.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
by Scott Dine | Accounting News, Uncategorized
Notice to QuickBooks Payroll Subscribers:
As of today the Indiana Unemployment (SUTA) wage base is still at $9,500 instead of the correct base of $7,000. Clients who are preparing their own UC-1 and UC-5A forms to report their wages and unemployment tax due will be reporting the wrong amounts due to this incorrect wage base. According to Intuit, an upcoming payroll update will address this issue and correct the wage base. Until then, clients need to either manually calculate these returns or wait until the update to prepare the forms using the QB program. In any case, clients need to make sure that they load all payroll updates as soon as they are available from Intuit.
by Scott Dine | Accounting News, Uncategorized
via IRS Tax Problem Solver Blog – IRS Help by Darrin Mish on 3/10/10
Here’s a relatively little known fact – you can completely cancel your tax debts by being declared a bankrupt. Of course, there are certain conditions that you must fulfill. But if you meet the basic criteria, you can wave goodbye to your tax debts. On the other hand, there are several implications about being declared a bankrupt, so be sure you talk to a lawyer to evaluate your debt removal options first before going ahead to apply for either Chapter 7 or Chapter 13 bankruptcy. Bankruptcy is not a convenient way to escape paying your tax dues, it is a provision for those who genuinely cannot afford to pay to be relieved of their tax debts.
There are 2 provisions of the Bankruptcy Code under which you can apply for bankruptcy. They are Chapter 7 and Chapter 13. In general, Chapter 7 bankruptcy means that you will have your entire tax debt forgiven. On the other hand, under Chapter 13 you may have some of your debt cancelled and the remainder will be paid off via installment payments. Most individuals choose Chapter 7 over Chapter 13, but if you have a lot in the way of assets or your own business, Chapter 13 may be a better answer for your particular situation. There is much to consider when it comes to bankruptcy, taxes and your own personal financial situation, so you need to have a good understanding of all this before deciding whether to go ahead with your bankruptcy application.
There are 5 conditions you must fulfill in order to make a successful application for bankruptcy. Firstly, the debt must be more than 3 years old in that the due date for filing your taxes must be more than 3 years ago. This prevents people from declaring bankruptcy year after year so they don’t have to pay taxes. This time frame also gives both you and the IRS plenty of time to figure out other methods of payment short of declaring bankruptcy.  Secondly, the tax return itself needs to be filed at least two years ago. Likewise, the third condition states that the assessment for your tax must be at least 240 days ago. These conditions are imposed to allow the IRS to have as much time as possible to collect the taxes from you. Bankruptcy should be a last resort.
Under the fourth condition, you must not fraudulently apply for bankruptcy otherwise you will not be given any bankruptcy protection. The final condition states that you must not be guilty of tax evasion at any point during your life. These rules about bankruptcy and taxes are vitally important if you wish to file for bankruptcy to remove your tax debt.
Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.
What You Should Know about Bankruptcy and Tax is a post from: IRS Tax Problem Solver Blog – IRS Help
