You were once cautioned about going over the Fiscal Cliff. Now beware of the expanding Tax Gap.
A significant difference between what taxpayers collectively pay in taxes and what taxpayers should have paid is significant. A report by the Center on Budget and Policy Priorities, (CBPP), was published in 2006. Compliant taxpayers must report all your wages, lottery winnings, and self-employment income.
The IRS is on a mission to close the tax gap between income Americans earn and income Americans report on their tax returns. As part of this mission a set of four new under-reporting letters is issued by the IRS. If you receive a Notification of Underreporting, contact the Medford Tax Experts today. A delay will only magnify and exacerbate the problem.
The IRS reports that about 85% of taxpayers are compliant. The compliance rate is unchanged since the prior study.
IRS attention to close this tax gap of almost $400 billion is spent on non-W2 wage and earned income. If you run a small business, you are obligated to keep source documents and adhere to generally accepted accounting practices.
Divulging poor record keeping habits to the IRS will create massive headaches for you. The penalties for willful neglect will cost you a lot of money and consume a tremendous amount of your time. Contact the Medford Tax Experts for assistance with your record retention responsibilities.
The US Government Accounting Office, (GAO), outlined the strategy to close the Tax Gap.
execute compliance checks before issues refunds
develop sophisticated compliance strategies
require more third party information
increase IRS enforcement efforts
optimize professional preparer services
modernize computer operations
simplify the tax code