Now that clients have received their W-2 forms from their employers, we’re starting to get into the main part of tax season.
It can be heavy going, especially with complications like the last-minute patch in the alternative minimum tax making things a little more interesting this year. Meanwhile the expectation of tax rebate checks arriving in mailboxes not too long after tax season provides some reason for hopefulness. It may not rescue the economy, but it’s always nice to receive an extra $600 or more in the mail.
Every year, despite proposals to the contrary, taxes seem to get more complicated to do. Not only are there more forms to worry about, but the penalties seem to become more onerous. Tax prep software helps automate the process, but there’s still a lot of work involved for taxpayers as well as preparers.
That’s a good thing for preparers. Unless one of the tax simplification schemes like the FairTax makes it through to actually being implemented, there will be plenty of work during tax season to go around.
Lately the IRS seems to be cracking down more and more on preparers who try to stretch the definition of earned income tax credit and the fuel tax credit. The IRS is being especially vigilant over any tax avoidance schemes. It’s also going after celebrities like Wesley Snipes and Ronald Isley of the Isley Brothers. Despite Isley’s poor health, an appeals court has upheld his 37-month sentence for tax evasion.
Litigation over taxes has also reached into academia. A Syracuse University professor is accusing the Internal Revenue Service of flouting three court orders requiring it to provide her with statistical data she needs for her studies of IRS enforcement practices.
Susan B. Long, a professor at Syracuse University’s Martin L. Whitman School of Management, has been using data from the IRS for over 30 years for her work co-directing the Transactional Records Access Clearinghouse, a data research organization affiliated with her school and the S.I. Newhouse School of Public Communications. She said she needs the data to track how the agency is enforcing the nation’s tax laws. But in the past few years, the IRS has been redacting the data it used to provide to her and distributing it in a format that’s difficult for her to use in her analysis. The IRS says it is trying to protect the confidential data of taxpayers, but Long believes the agency is stonewalling and defying court orders.
This tax season is looking to be an extra complicated one for taxpayers, preparers, the IRS, and assorted other stakeholders like academia. With the economy in an uncertain state, let’s hope it’s a well-paying one for tax professionals.
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