More Wealthy Americans Need Tax Help
The IRS just released a study showing a rise of under-reporting by American taxpayers to the tune of $450 billion dollars in 2006; that’s up $105 billion from the last IRS study that was conducted in 2001.
A Forbes article called New IRS Tax Gap Report: Cheating Still Rampant shows taxpayers have an 83.1% compliance rate. That means that the 17% of American taxpayers who are under-reporting their taxes are contributing more to widening the tax gap, and as a result, will face the wrath of the IRS (and their stepped up, often aggressive collection efforts!).
Let’s look deeper into who these non-compliant taxpayers are; typically wealthy Americans hiding overseas assets and the self- employed, and you’ll see why the IRS is currently laser focused on exposing them into coming forward. Tax Cheats beware: you are going to need IRS tax relief to win this one.
According to this recent study, overall compliance is highest amongst regular wage earners who are beholden to third-party information reporting and/or withholding to the IRS on W-2 forms. As a result, the IRS reports a net of only 1 percent of wage and salary income was misreported.
With amounts subject to little or no IRS information reporting, they showed a 56 percent net misreporting rate in 2006. This under reporting of taxes becomes a major contributing factor to the tax gap; the difference between the amount of taxes reported and the amount of taxes the government actually collects. If you are a small business owner with IRS tax problems or have yet to report your offshore accounts to the IRS, know that it won’t take long before the IRS is knocking on your door to collect from you. It’s best to know your options.
A sluggish economy has the IRS looking to find revenue where it can, often from those it may not have focused on before. This narrowed approach goes after the people and the practices that could cause severe IRS tax issues, been lax about regulations and non-compliance, and who in the past, have gone unchecked and allowed to flourish.
For non-compliance issues, the IRS will focus on the following areas:
- Unscrupulous tax return preparers: A continued crack down on unscrupulous tax return preparers and by registering all paid return preparers.
- Cost basis reporting for stock brokers and mutual fund companies: Brokerage firms will be required to report costs basis information on stocks and mutual funds to investors and the IRS, and will make incorrect reporting much harder if not impossible to do.
- New merchant card reporting requirements: Helps IRS to spot businesses that are either underreporting receipts or not reporting at all.
- U.S. individuals with financial accounts overseas: Continued monitoring will help the IRS keep raps on offshore tax avoidance and bring American citizens overseas into FBAR compliance.
If you are one of the Americans facing the IRS and under-reported income, at this stage, you are wise to hire a tax attorney or certified tax resolution specialist to help you understand IRS enforcement practices and to inform you of options for an IRS tax settlement.
More Tax Help, IRS News and Tax Relief Tips:
- Tax Advocate Warns Taxpayers Rights at Risk
- Your Unfiled Delinquent Tax Return Checklist: Stop the IRS Now and Avoid Steep Interest and Penalties from Accumulating
- Do You Owe Back Taxes? Are Under Audit? Don’t Hide from the IRS Anymore, Get Tax Relief Now!
- Tax Resolution Services interviewed by Terry Bradshaw
- Big IRS Tax Lien for Lil’ Kim
Tags: Back Taxes, certified tax resolution specialist, delinquent tax returns, Foreign Bank and Financial Accounts (FBAR), IRS debt, IRS enforcement, IRS payment plan, irs problems, IRS tax problems, tax gap, tax relief, tax resolution, tax settlement, Tax Tips
