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With the IRS more aggressively pursuing tax cheats, tax audits are steadily on the rise. In 2008, the IRS collected $56.4 billion in tax revenue - $7.7 billion more than in 2006. Nearly 1.4 million Americans were audited in 2008, just over 1% of all returns filed. Individuals and businesses - both big and small - can be financially crippled in the current economic downturn if they fail to meet their tax obligations.
With Obama proposing to increase the tax enforcement budget and hire hundreds of new IRS agents to crack down on offshore tax dodgers and under-reported income, it’s important for taxpayers to know how to prevent or resolve tax audits and avoid financially debilitating levies.
Whether you underreport some, most, or all of your income, the penalties are severe. Additionally, the IRS will consider you a tax cheat and you will be guilty of tax evasion for even the smallest amount of underreported income.
With the growing federal deficit, proposed government bail out plans, and a push to close the $345 billion tax gap, we will be seeing stepped up enforcement by tax collectors who are likely to focus their compliance efforts on small businesses.
Business owners tend to be the biggest group of tax evaders, particularly during economic downturns, and there are far too many business owners looking over their shoulders in fear of the IRS.
In the current economic downturn, we are seeing many struggling businesses falling behind on payroll tax deposits. And business owners need expert tax representation to protect the future of their companies and avoid IRS levies on their wages, bank accounts and customer receivables.
Several states have already started putting more money and personnel into cracking down on tax cheats - large and small - to cut into their growing budget deficits. They have sent letters out to small businesses warning them of the consequences of not collecting or remitting state payroll and sales taxes.
The good news is that in anticipation of this newly aggressive tax enforcement, the IRS is offering taxpayers unprecedented opportunities to resolve their tax problems.
For instance, the IRS is offering temporary amnesty to those taxpayers hiding money overseas in a new voluntary disclosure process. Taxpayers who come forward will face fines, penalties and interests — but the IRS will waive all criminal charges.
Geitner made a voluntary disclosure for $34,000 in back taxes to the IRS just days before he was nominated for Treasury Secretary. Taxpayers need to take advantage of special considerations being offered by the IRS in this weak economy to make a voluntary disclosure or negotiate a tax settlement that can help them avoid significant financial problems in the long run.
One way recession-burdened Americans can settle back taxes is by negotiating an Installment Agreement with the government that that allows payment of liabilities over time. And now, if a taxpayer with an existing payment plan is worried about missing a installment because of a job loss or other financial hardship, the IRS has assured the public that a missed payment will no longer lead to an automatic end (default) to that agreement.
There’s a solution to every problem, but you will need a seasoned and experienced tax professional who is a Certified Tax Resolution Specialist, in addition to just being an attorney, CPA or Enrolled Agent to help you reduce your IRS debt and professionally represent you. A professional and ethical company can help you qualify for an offer in compromise settlement, negotiate an abatement of penalties due to reasonable cause, or find another solution that fits your situation and permanently solves your IRS problems for the lowest amount under the law.
For more information on resolving tax audits or to get professional tax advice on reducing your IRS debt, visit www.taxresolution.com for a free tax relief consultation or call 866-IRS-PROBLEMS. .
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Source by Michael Rozbruch
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