IRS BOOSTS TAX AUDITS

Washington, D.C. -- The Internal Revenue Service said that it has increased its enforcement efforts, auditing 84 percent more returns in fiscal year 2007 of individuals with incomes of $1 million or more compared to fiscal year 2006.

The number of those taxpayer audits jumped from 17,015 in fiscal year 2006 to 31,382 in fiscal year 2007, which ended Sept. 30. One out of 11 individuals with incomes of $1 million or more faced an audit in 2007.

The IRS has also been auditing more individuals with lower incomes. Audits of individuals with incomes over $200,000 climbed 29.2 percent to 113,105 taxpayers in FY 2007 from 87,885 in 2006. The IRS conducted 13.7 percent more audits of individuals with incomes of $100,000 or less, auditing 293,188 returns in FY 2007 compared to 257,851 in 2006.

The total number of individual returns audited increased 7 percent, reaching 1,384,563 in 2007 from 1,293,681 in 2006. The IRS filed 3.8 million levies and almost 700,000 liens during 2007, an increase from 2006.

Businesses, too, experienced more IRS audits, with the agency focusing on mid-market corporations with assets between $10 million and $50 million. Audits of S corporations were up 26 percent to 17,681 during 2007, from 13,984 in 2006. Audits of partnerships increased to 12,195 during 2007, 25 percent more than the prior year's total of 9,777. Audits of businesses in general rose to 59,516 in 2007, an increase of almost 14 percent from the prior year's total of 52,223. While audits of large corporations dipped slightly in 2007, to 9,644, the number is up 14 percent from FY 2002.

All those extra audits paid off, with enforcement revenue reaching $59.2 billion, against $48.7 billion in 2006 and $34.1 billion in 2002.

IRS ADDS TO FRIVOLOUS CLAIMS LIST

Washington, D.C. -- The Internal Revenue Service has amended its list of "frivolous" legal arguments used by people who want to avoid paying taxes, adding four new claims to the set that it considers without merit. They include misinterpretation of the Ninth Amendment to the U.S. Constitution regarding objections to military spending; erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States or the IRS; a nonexistent "Mariner's Tax Deduction" related to invalid deductions for meals; and misuse or excessive use of the Section 6421 fuels credit.

The IRS said that taxpayers who file tax returns or make other submissions with these and other claims on its list are subject to a $5,000 penalty. The penalty increased from $500 to $5,000 in 2006. Notice 2008-14 lists the other positions that the IRS considers frivolous for purposes of the penalty. It applies when filing a frivolous tax return or submitting to the IRS a frivolous request for a collection due process hearing or application for an installment agreement, offer-in-compromise or taxpayer assistance order.

ADP OFFERS SALES TAX SYSTEM

Roseland, N.J. -- ADP's Taxware division has released ADP Outsourced Sales Tax Service, a system that calculates sales and use taxes, completes forms, and transfers funds to state and local governments. The system automates tax calculations, filings and payments, as well as back-office services. ADP's Sales and Use Tax System or Taxware Enterprise performs the calculations. The system includes an audit trail, up-to-date compliance with recent tax laws and regulations, and automated clearing-house payments and tax filings. For more information, visit www.adptaxware.com.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access