Washington (June 29, 2002) -- The Internal Revenue Service has launched an enhanced compliance effort to encourage taxpayers to properly report partnership, S corporation or trust income or losses on their individual tax returns. Some taxpayers may soon receive notices requesting an explanation for a discrepancy.
The IRS earlier this year began matching information reported on Schedule K-1 with income or losses reported on Form 1040 and other schedules. The IRS will send notices to taxpayers when there is a mismatch in information provided on tax year 2000 returns. In many cases, the taxpayer or tax professional can resolve the issue with a letter or phone call.
"The IRS is committed to refining the process. We will continue to work with the practitioner community to provide on-going status reports and to solicit feedback for program enhancements," said Joe Kehoe, commissioner of the Small Business and Self-Employed Division.
In an effort to perfect the matching program, IRS examiners are manually screening returns to ensure consideration of issues such as passive loss limitations and income or losses reported on Schedule E. A notice is generated when the examiners are unable to determine the cause of the discrepancy.
-- Electronic Accountant Newswire staff
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