IRS enforcement figures

December 17, 2009 | Mike Habib, EA

Table 16. Delinquent Collection Activities, Fiscal Years 2005-2008

[Money amounts are in thousands of dollars.]

Activity

2005

2006

2007

2008

(1)

(2)

(3)

(4)

Returns filed with additional tax due:

Total amount collected [1]

[r] 27,615,348

[r] 29,172,915

[r] 31,952,399

28,465,648

Taxpayer delinquent accounts (thousands):

Number in beginning inventory

5,981

6,478

7,074

8,240

Number of new accounts

5,870

6,100

7,146

7,099

Number of accounts closed

5,373

5,504

5,980

6,107

Ending inventory:

Number

6,478

7,074

8,240

9,232

Balance of assessed tax, penalties, and interest [2]

57,594,901

69,555,590

83,488,988

94,357,717

Returns not filed timely:

Delinquent return activity:

Net amount assessed [3]

22,765,462

23,305,535

30,287,802

24,888,918

Amount collected with delinquent returns

3,584,255

3,905,764

3,968,163

3,773,528

Taxpayer delinquency investigations (thousands) [4]:

Number in beginning inventory

3,022

3,658

3,874

3,732

Number of new investigations

2,558

2,373

2,587

1,972

Number of investigations closed

1,922

2,157

2,729

2,271

Number in ending inventory

3,658

3,874

3,732

3,433

Offers in compromise (thousands) [5]:

Number of offers received

74

59

46

44

Number of offers accepted

19

15

12

11

Amount of offers accepted

325,640

283,746

228,975

200,103

Enforcement activity:

Number of notices of Federal tax liens filed

522,887

629,813

683,659

768,168

Number of notices of levy served on third parties

2,743,577

3,742,276

3,757,190

2,631,038

Number of seizures

512

590

676

610

[r]–Revised.

[1] Includes previously unpaid taxes on returns filed plus assessed and accrued penalties and interest. For Fiscal Year 2008, includes a total of $37,254,116 (dollars) collected by private debt collection agencies.

[2] Includes assessed penalties and interest but excludes any accrued penalties and interest. Assessed penalties and interest—usually determined simultaneously with the unpaid balance of tax—are computed on the unpaid balance of tax from the due date of the return to the date of assessment. Penalties and interest continue to accrue (accrued penalties and interest) after the date of assessment until the taxpayer’s balance is paid in full.

[3] Net assessment of tax, penalty, and interest amounts (less prepaid credits, withholding, and estimated tax payments) on delinquent tax returns secured by Collection activity.

[4] A delinquency investigation is opened when a taxpayer does not respond to an IRS notice of a delinquent return.

[5] An offer in compromise (OIC) is a binding agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. An OIC will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement.

NOTES: Detail may not add to totals because of rounding. All amounts are in current dollars.

SOURCE: Small Business/Self-Employed, Collection Planning and Analysis, Collection National Reports SE:S:C:PA:CNR

Getting Tax Relief Help

October 6, 2009 | Mike Habib, EA

Getting Tax Relief Help

By Mike Habib, EA

Even when you’re really careful about filing your income tax returns, something’s always bound to go wrong when you least expect it. It’s not uncommon to find even the most discerning and meticulous individuals and businesses to find themselves searching for tax relief assistance to get themselves out of their tax problems. The key is to obtaining efficient debt settlement help so you don’t have to spend most of your time trying to talk the IRS into hearing your side.

Tax Relief Second Opinion

September 18, 2009 | Mike Habib, EA

Thinking of hiring a $5000 tax attorney?

HOLD IT.

If you do not qualify for an IRS Offer in Compromise, an attorney CANNOT help you.

CEO Personally Liable for Unremitted Taxes

September 1, 2009 | Mike Habib, EA

CEO of Long Distance Phone Service Reseller Personally Liable for Unremitted Taxes (Brinskele, FedCl)

An individual who was the chairman, president and CEO (“the CEO”) of a company that resold long distance telephone service had to pay the IRS an assessed penalty plus interest. The term “markup,” in the context of the litigation, referred to the margin between the price at which the company purchased long distance minutes and the higher price at which it resold them. The assessed penalty amount represented the portion of the Code Sec. 4251 communications excise tax collected by the company from its customers on the markup.

In the court’s previous opinion (2006-2 USTC 70,261), it held that the company had an obligation to pay over to the IRS any monies it collected for long distance telephone service even if that service was improperly taxed. Here, the “overwhelming evidence,” indicated that the company did in fact collect the Code Sec. 4251 tax on the markup but failed to remit it to the IRS. Further, the CEO was a responsible person for purposes of Code Sec. 6672. In addition to being the company’s CEO, he was its founder, at times its controlling shareholder, and for a period of time signed many of its checks. Finally, the CEO acted willfully in failing to pay the Code Sec. 4251 tax to the IRS; therefore, he was personally liable for the unpaid taxes. He both knew of his obligations to remit the tax collected on the markup and showed a reckless disregard of the company’s tax responsibilities by failing to do so.

IRS May Mine Mortgage Data To Flush Out Tax Cheats

September 1, 2009 | Mike Habib, EA

IRS May Mine Mortgage Data To Flush Out Tax Cheats

Source: Dow Jones

WASHINGTON -(Dow Jones)- The Internal Revenue Service might scrutinize mortgage interest data more closely to help catch tax cheats, after prompting from an IRS auditor.

IRS Urgent Letters and Notices

July 23, 2009 | Mike Habib, EA

IRS Urgent Letters and Notices That YOU MUST ATTEND TO

Mike Habib, EA

IRS Audit & Examination Letters

Letter 525 – General 30 Day Letter

This letter accompanies a report giving you a computation of the proposed adjustments to your tax return. It informs you of the courses of action to take if you do not agree with the proposed adjustments. The letter explains that if you agree with the adjustment, you sign and return the agreement form. If you do not agree, you can submit a request for appeal/protest to the office/individual that sent you the letter. The letter or referenced publications explain how to file a protest. You need to file your protest within 30 days from the date of this letter in order to appeal the proposed adjustments with the Office of Appeals.

Tax Crack Down on CASH ECONOMY

July 18, 2009 | Mike Habib, EA

Hawaii Cash Economy Enforcement Act of 2009

On June 18, 2009, Governor Linda Lingle signed Senate Bill 972 SD2, HD1, CD1 into law as Act 134, the “Cash Economy Enforcement Act of 2009.”

This Act provides the department with additional resources and tools to target high-risk, cash-based transactions to shore up confidence in Hawaii’s tax system. In this regard, this measure ensures that all sectors of Hawaii’s economy, including those prone to substantial underreporting, are paying their fair share of taxes.

This Act focuses on the civil collection and enforcement nature of Hawaii’s tax laws, by establishing the Special Enforcement Section, a group of tax officials charged with handling sensitive and high-risk civil tax cases as directed by the director. This Act also provides various enforcement tools, including the authority to issue monetary fines and cease and desist citations.

FL State Collection

July 17, 2009 | Mike Habib, EA

Florida Department of Revenue Administrative Collection Processing Fee Beginning September 1, 2009

Effective May 30, 2009, a new law imposes a 10 percent administrative collection processing fee on any outstanding debt older than 90 days. The fee is equal to 10 percent of the total amount of tax, penalty, and interest owed, or $10 for each collection event, whichever is greater. A “collection event” is defined as any time a taxpayer fails to:

• Timely file a complete return.

IRS List of Interest

July 17, 2009 | Mike Habib, EA

IRS Releases List of Transactions of Interest (Notice 2009-55)

The IRS has provided a list of transactions that have been identified by the Service as “transactions of interest.” The IRS will consider transactions similar to any of the transactions on the list to be transactions of interest for purposes of Code Secs. 6111, 6112, 6662A, 6707, 6707A and 6708, and Reg. §1.6011-4(b)(6).

One transaction of interest (initially identified in Notice 2007-72, 2007-2 CB 544) involves taxpayers who purchase a remainder interest or similar successor member interest directly or indirectly in real property and then transfer such interest to a tax-exempt organization, claiming a charitable contribution deduction significantly higher than the amount paid for the interest. The Treasury and the IRS are concerned that taxpayers may be utilizing the contribution of such successor member interests to generate an excessive deduction.

Construction Industry Tax Problems

July 14, 2009 | Mike Habib, EA

Construction Industry Tax Issues

Accumulated Earnings Tax

Closely held C corporations are more likely to accumulate earnings and profits beyond the reasonable needs of the business in order to avoid income taxes on its shareholders than are large C corporations. Each accumulated earnings case is unique. No pro forma guide for calculating a taxpayer’s reasonable needs can be prepared. Reasonable needs that would usually be considered in any accumulated earnings case are the need for sufficient net liquid assets to pay reasonably anticipated, normal operating costs through one business cycle and sufficient net liquid assets to pay reasonably anticipated, extraordinary expenses and capital improvement financing.

In addition, the following represents a non-exclusive list of specific items that should be considered for construction contractors: