Happy Friday! It’s time to review tax relief topics covering an array of IRS tax issues in recent news.
S-Corp Businesses-Target of IRS audits: Reuters reported in their article Small business audits often find no more taxes due-IRS watchdog about an increase in S-Corporation audits. IRS treasury inspector general for tax administration, Russell George went on record to denounce the increase after discovering the increase in “S-corporation” audits did not yield additional taxes owed. George claimed the Agency is spending more than it’s gaining from the audits.
IRS Sees Increase in Tax-Exempt Organizations
A hot tax news topic in the last few weeks has regarded tax-exempt organizations. A Reuters article titled About 50 political groups win tax-exempt status: IRS reports on the granting of 501(c) (4) tax exempt requests from groups with political intentions. While 501(c) (4) groups cannot endorse a candidate or political party, their tax-exempt status grants them the ability to obtain unlimited campaign contributions without disclosing fundraising donors. These groups are admittedly difficult for the IRS to regulate. Consumer groups have been quite vocal in their push to make sure groups are not abusing their tax-exempt status for political gain.
IRS Tax Problems for Willfully Ignoring FBAR
If you are thinking about not reporting your offshore bank accounts, think again. Two recent cases showed how tough the IRS is on taxpayers who intentionally ignore FBAR regulations. Charges can be as follows:
- A civil penalty of $10,000 for each non-willful violation.
- Willful violations can be levied for up to $100,000 or 50% of the account amount for each violation. Separate violations = each year of non-filing.
- Criminal penalties can result in a $250,000 fine and 5 years of imprisonment.
Also, the IRS considers “not knowing” and not properly reading tax forms “willful blindness” that are subject to the stiffer IRS penalties. If you have unreported accounts, you are advised to consult a tax attorney right away to prevent harsh actions taken against you.
Biggest Tax Problem Facing IRS: Identity Theft
This subject continues to haunt the IRS. An Examiner.com article titled IRS hands over $21 billion to thieves highlights the IRS treasury inspector general Russell George’s report released yesterday that shows just how prevalent tax fraud is to the IRS. The report touched on three main points:
- Identity thieves received about $5 billion in 2011 from the IRS.
- Tax Fraud is thought to grow to $21 billion over the next five years.
- The IRS is unable to detect as many fraudulent claims as there actually are. For example: while the IRS detected 940,000 fraudulent returns, 1.5 million more possibly went undetected.
However, the IRS does catches up with its share of people trying to beat the system. This week’s tax cheats included:
- James C. Howell Jr., 54, a CPA in Germantown, Tennessee admitted to evading payment of nearly $300,000 in taxes.
- John Kieran Hynes, formerly of San Rafael, California is facing up to three years in prison and a $250,000 fine for filing false tax returns and under reporting his company’s gross receipts at $10.2 million all the while knowing the totals to be larger.
Taking Home Olympic Gold-Team USA athletes and the IRS
With the Olympics in full swing, Team USA athletes should be advised that they will owe taxes on their winnings related to the games. A Huffington Post article titled Olympians Could Owe the IRS Thousands in Taxes on Medals, Cash Bonuses revealed that medals and prize money represent income and are subject to taxes. Americans for Tax Reform calculated (using a 35% tax rate) a gold medal winner will have IRS tax debt of at least $8,750. This IRS issue has left many to challenge the tax law. Senator Marco Rubio (R- Fla.) this week introduced an IRS tax relief bill that aims to exempt London Olympic athletes from paying taxes to the IRS – thus allowing them to keep more of the winnings they earned.
Have a great weekend!
More Tax Help, IRS News and Tax Relief Tips:
- Tax Relief Weekly News Round-Up
- Tax Fraud Enforcement-IRS Suggests Local Police
- Prevent Tax Scams-Abuse of Charitable Deductions
- Back Tax Help-How Long to Keep IRS Records
- IRS Loses Tax Shelter Case & Billion in Revenue