Check out some of my blog posts for the month of April! Please click on the links below to read more.
1. Rushing Through Your Taxes Can Increase the Odds of an IRS Audit
It is not uncommon for many people to want to get done with their taxes as quickly as possible and not devote a moment beyond what they have to. If they complete their own taxes using computer software or an online program, they may rush through the process and fail to read and understand what is being asked. This can lead to failure to make required disclosures, submitting erroneous information to the IRS, and other tax problems. Even if you work with a tax preparer, rushing through the process can still land you in a difficult situation should you fail to disclose all sources of income, submit incomplete tax documents, or fail to provide the tax preparer with all of the information he or she will need to complete your taxes accurately. These failure can result in a tax audit which may reveal further noncompliance with the US Tax Code and additional penalties.
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2. Four Family Members who Defrauded the IRS of more than $5 million in Payroll Tax Payments Face Prison
Temporary employment agencies have become a more prevalent part of the American work experience since the 2007 financial crisis and the difficult economic times that followed. While on one hand, temporary employment agencies can provide workers with an entry point into a new industry, on the other hand they require payment for their placement services that could otherwise be used to pay the worker a higher wage or to hire additional workers. Furthermore, when the temporary agency acts as the worker's employer, certain duties and acts are required of the employer. Failure to satisfy these tax duties can lead to criminal prosecution and result in a prison sentence or significant monetary penalties.
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3. Beware of the Unexpected Tax Refund Windfall & Other Pitfalls
Each and every year April 15th brings fear and dread for millions of Americans who fear that they will face ahefty tax liability. Some may even choose to put off the filing by requesting an extension prior to the filing deadline, but the fact remains that the tax will have to be reported and paid at some point. However, for some, their tax return may contain an unexpected surprise: a significant tax refund.
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4. Failure to File Taxes Plus a Frivolous Tax Argument Can Equal a Prison Sentence
The Wisconsin owner of several self-help and life development companies received a rather jarring wake-up call when he was convicted on tax crimes and sentenced to a year in federal prison. Eric T. Plantenberg had failed to file taxes for ten years from 2000 to 2010 after he began subscribing to the views of the Church of Compassionate Service. According to court documents the Church of Compassionate Service is a group that advances frivolous tax arguments, chiefly to individuals who are receptive to an anti-tax or anti-government message. Arguments related to and reminiscent of the group's anti-tax position have been determined to be clearly frivolous by the courts since at least the early 1980s.
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5. Attempts to Conceal Your Tax Mistakes Compounds Your Tax Problems Increasing the Risk of a Prison Sentence
Nobody wants to file and pay taxes. However, the only thing worse than filing and paying taxes each year may be making a filing mistake that opens one up to an IRS tax audit or a criminal tax prosecution. Many times taxpayers may realize that they made an error on their initial filing. However what the individual does next could determine the consequences he or she may face. If, in a panic, the taxpayer attempts to conceal the error, she may have very well compounded her liability and make the possibility of facing severe tax consequences more likely. However, if the taxpayer discloses the error and corrects it she may be required to pay a relatively small penalty, but that could be the extent of the consequences.
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6. FATCA Obligation? IRS' International Data Exchange Service Again Ratchets up Risk of Undisclosed Foreign Account Detection
Since FATCA's passage, critics of the law have assailed its provisions and the IRS' interpretations of the law. However one of the most oft-repeated charges against the account disclosure statute was that the IRS, itself, was not ready for the law and could not handle the influx of data including complex tax filings. A December 2011 New York Times article lamented that the IRS was not prepared for the fierce reaction from overseas or differences in how each tax agency handles their process. For instance, at the time there was concern regarding how manual verification would work in tax systems like Japan's which relies on electronic screening rather than manual actions.
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7. IRS Continues Its Tax Enforcement Crackdown on S Corporations
The 2007 financial crisis and its aftermath fundamentally changed how Americans think about risk and business. Another effect of the financial crisis was creating a renewed urgency regarding balancing the federal government's finances. While many in Congress focus on reducing expenditures, the IRS has continued its efforts to increase tax revenues through better identification of tax fraud and tax avoidance even with a decreased budget.
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8. Tax Preparer Fraud Can Lead to Serious Consequences for both the Tax Professional and Filer
Most accountants, CPAs, and certified tax preparers are honest, hardworking people who are dedicated to their profession. Most tax professionals simply want to secure the best possible tax deal for their clients while following all best practices regarding accuracy. However some tax professionals may over emphasize their ability secure favorable tax treatment for their clients and may cross the line into overly aggressive tax minimization strategies. Even more troubling, other tax preparers may be corrupted by greed and act dishonestly by improperly obtaining or using client tax refunds or other client funds.
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