Tag Archive for IRS
According to the newly released 2012 IRS Data Book, the IRS collected almost $2.5 trillion in federal revenue and processed 237 million returns, of which almost 145 million were filed electronically. Out of the 146 million individual income tax returns filed, almost 81 percent were e-filed. More than 120 million individual income tax return filers received a tax refund, which totaled almost $322.7 billion. On average, the IRS spent 48 cents to collect $100 in tax revenue during the fiscal year, the lowest cost since 2008.
The IRS examined just under one percent of all tax returns filed and about one percent of all individual income tax returns during fiscal year 2012. Of the 1.5 million individual tax returns examined, nearly 54,000 resulted in additional refunds.
An electronic version of the 2012 IRS Data Book can also be found on the Tax Stats and the following are some highlights worth noting.
In FY 2012, IRS initiated 5,125 criminal investigations.
In FY 2012, the IRS closed 60,793 applications for tax-exempt status and other determinations. Of those, the IRS approved tax-exempt status for 52,615 organizations. In FY 2012, the IRS recognized more than 1.6 million tax-exempt organizations and nonexempt charitable trusts.
In Fiscal Year 2012, General Counsel received 31,295 Tax Court cases involving a taxpayer contesting an IRS determination that he or she owed additional tax.
IRS workforce and the resources that the IRS spends to collect taxes and assist taxpayers. In Fiscal Year (FY) 2012, the IRS collected more than $2.5 trillion, incurring a cost of 48 cents, on average, to collect $100.
IRS’s actual expenditures in FY 2012 was less than $12.1 billion, which was used to meet the requirements of its three core operating appropriation budget activities.
In FY 2012, the IRS employed a total workforce of 97,941, including part-time and seasonal employees.
According to the Treasury Inspector General for Tax Administration (TIGTA) the IRS needs to expand audits to other tax years and tax matters when large dollar amounts are involved in a preexisting audit making it all the more important to know exactly what you are doing when communicating with the IRS. A couple of general rules of conduct are in order. First you want to create the perception that you are working to help the Revenue Agent or Officer ‘close’ your file which is manifested in timely responses and general communication. Second you want to answer the SPECIFIC QUESTION ASKED and nothing more. If the Revenue Officer or Agent asks you what time it is, don’t tell them how to build a watch. This only invites opportunity for further inquiry and probing.
Here’s what the TIGTA Report concluded verbatim and how the IRS responded:
“TIGTA identified three factors that likely contributed to our concerns with expanding audits. First, the IRS strives to keep its audit inventories free of old tax year returns. As a result, tax compliance officers seldom expand an audit to a taxpayer’s prior year return. Second, case file documentation does not indicate that tax compliance officers are taking full advantage of the IRS’s internal sources of information when conducting required filing checks. Third, the IRS’s performance feedback mechanisms are not always taken advantage of to hold tax compliance officers accountable for the quality of their filing checks.
TIGTA recommended that the Director, Exam Policy, Small Business/Self-Employed Division, provide: 1) detailed examples to tax compliance officers on when it would be appropriate to expand audits to prior and/or subsequent year returns, 2) information to tax compliance officers that focuses on using the IRS’s automated information systems to enhance the quality of required filing checks, and 3) additional guidance to first-line managers to improve the feedback provided to tax compliance officers on the quality of required filing checks.
In their response to the report, IRS officials agreed with the recommendations and plan to: 1) provide examples in internal publications that show when it is appropriate to expand audits, 2) conduct a workshop on using IRS automated systems, and 3) improve the feedback provided to tax compliance officers on the quality of their filings checks. Although IRS officials agreed with all three recommendations, they did not agree with the potential monetary benefits associated with the recommendations.
To view the report, including the scope, methodology, and full IRS response, go to:
The recent resolution of the Andrew Oliver case may mark the death throes of the NCAA’s no-agent rule, prohibiting college athletes from retaining agents in professional contract negotiations, and perhaps the traditional paradigm of amateurism in sport. In light of the trial court’s ruling, as well as continuing calls for the revocation of the NCAA’s tax-exempt status, the time is ripe for a reexamination of amateurism and the law.
This Note argues that the NCAA has developed a complicated web of largely unenforceable rules and regulations that are unnecessary to maintain tax-exempt status in light of the regulatory environment. This Note examines the antitrust, labor, and tax consequences of changing definitions of amateurism. Focusing on the IRS interpretations of amateurism, this Note concludes that a less restrictive amateurism regime would still achieve many of the legal benefits sought by the NCAA. This analysis has broader implications for tax policy and the culture of sport.
Calling for a shift to a “new amateurism,” this Note contributes a novel redefinition of amateurism that reflects the current environment of intercollegiate sport. Modern amateurism should recognize the profit motive of the student-athlete. Under a less restrictive NCAA rule-making regime, the remaining rules are enforceable and fair. In substituting protections for student-athletes in place of the current paternalism, the NCAA will reduce the likelihood that future rules will be overturned by court challenges.
My personal opinion is that the NCAA is evil and corrupt and should be dissolved.
The IRS is setting up a special unit that will take a more skeptical look at the various strategies used by the wealthy to reduce their tax burden (see Shulman Has ‘Some Sympathy’ for CPA Concerns). That includes trusts, real estate investments, royalty and licensing agreements, private foundations and flow-through entities of various kinds. The agency is hiring extra agents and specialists for the new unit, including flow-through specialists and international examiners, to scrutinize high-wealth individuals and their related enterprises.
Not only that, but the IRS is also expanding its international enforcement efforts, going after tax evaders and affiliated businesses in Central America, Asia and the Caribbean, while opening new IRS offices in Beijing, Panama City, and Sydney, Australia. Shulman noted that other countries are also creating high-wealth groups, including the United Kingdom, Japan, Germany, Canada and Australia. The IRS will likely be working with those agencies and sharing information with them.
CPAs and their clients should be prepared for the increased scrutiny and enforcement efforts. A major concern for many tax preparers is the regulatory overhaul that Shulman has been working on since June. Shulman plans to send his recommendations by the end of the year to Treasury Secretary Tim Geithner and the White House.
He has been hearing from the AICPA in the public forums the IRS has been holding that CPAs are already subject to stiff Circular 230 requirements (as are enrolled agents and tax attorneys). Shulman said he had some sympathy with CPAs’ concerns about having new testing requirements imposed on them. But testing requirements may be beside the point. CPAs will need to be extra careful about signing off on the kinds of complex tax strategies used by high-income individuals, and having a hand in devising such plans. Otherwise the IRS’s new unit could make them a target as well as their clients.