The IRS’s latest step to curb tax evasion is to target tax preparers deemed “high risk.” The IRS will send notice letters and have agents pay visits in person.
By Steven N. Klitzner
The Internal Revenue Service has announced yet another very aggressive step to curb tax cheats.
Starting next year, the IRS will target tax return preparers the tax-collecting agency views as “high risk.” In fact, the IRS is going so far as to send letters to these tax preparers, notifying them that they’re being watched.
“The letters are intended to bring to these return preparers’ attention that we’ve noticed some questionable traits on a number of their Schedules A, C, or E,” IRS Commissioner Doug Shulman said during a November conference in Washington, D.C., sponsored by the American Institute of Certified Public Accountants. “We ask preparers to review the rules in these areas and to ensure they are meeting their due diligence requirements when interviewing clients.”
In addition, IRS agents will be dropping in on these tax preparers, giving the enforcement a personal – and somewhat intimidating – touch.
“Some additional compliance efforts will include, for example, in-person visits focused on return preparers we’ve identified as ‘egregious’ with high error rates,” Shulman said. “And we will be ratcheting up our efforts to identify ‘ghost preparers.’ ”
What’s does this all mean for you, as taxpayers?
It’s yet another sign of the IRS’s continued aggression toward tax cheats. From all sides, the tax-collecting agency is putting pressure on institutions and people who help taxpayers cheat on their taxes.
This started when the IRS brokered a deal with credit card companies to provide the government with information about customers who registered bank accounts overseas but then used cards linked to those overseas accounts to pay for expenses in the United States – a common way of sheltering money from taxes. That deal allowed the IRS to curb this abusive scheme.
Not long after came the big news: The IRS pierced the Swiss banking veil. In an unprecedented deal that came about only with to the threat of prosecution, Swiss banking giant UBS agreed to provide the U.S. government with the names of those it suspected of using its accounts to evade paying taxes in the United States.
Just this month, in fact, information from UBS resulted in a huge win for the IRS and the Department of Justice.
Richard Werdiger, a former UBS client, was sentenced to one year and one day in prison for conspiring to defraud the IRS. He had hid more than $7.1 million at UBS and evaded nearly $400,000 of taxes.
All the while, IRS enforcement budgets and individual audits have been going up, up, up.
In a down economy, there’s even greater pressure on the IRS to bring in revenue – and more of that revenue is coming from aggressive enforcement.
Steven N. Klitzner is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers, and an Aventura attorney. You can contact him at 305-682-1118 to obtain a free subscription to his newsletter titled The IRS Times & Inquirer.
