Tax And Accounting Tips

Tax And Accounting Tips

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National Taxpayer Advocate Nina E. Olson today released a report to Congress that recognizes the concern issues the Taxpayer Advocate Service (TAS) will address through the coming fiscal calendar year. The record expresses concern about the adequacy of IRS taxpayer service, as the IRS starts to implement health care reform particularly, about new information reporting burdens facing small businesses and others, and about certain IRS collection practices.

1. Taxpayer Services. Spending for IRS taxpayer service programs has been declining in recent years. At the same time, more taxpayers have been getting in touch with the IRS for assistance as the IRS has been tasked with administering an increasing number of public advantage programs, including Economic Stimulus Payments, Making Work Pay credits, and First-Time Homebuyer credits.

The survey says that because of this of the imbalance between taxpayer demand and IRS resources, the IRS has fallen in short supply of providing sufficient taxpayer service in important areas. The report features a lot of the nagging problem to insufficient funding for taxpayer services. While funding for the IRS overall has been increasing lately, the excess funding has been earmarked for enforcement programs. Moreover, a substantial portion of the cover taxpayer service includes the costs of processing tax returns, which is an overhead function essentially.

685 million, or six percent of the IRS budget. The report asserts the slashes in taxpayer service spending are dangerous both because they undermine tax compliance and because they undermine the IRS’s ability to successfully deliver social advantage programs. There appears to be an implicit assumption included in existing budget methods and projections that increasing tax compliance requires ramping up enforcement which taxpayer service is less important – maybe even unimportant – for compliance.

We think this implicit assumption is wrong. Consider an individual without a university degree, who becomes a successful electrician or plumber with a growing customer base. The report states that many noncompliant taxpayers are baffled by complex states and rules that additional taxpayer service, particularly outreach and education, could improve tax compliance. Second, with respect to the IRS’s ability to provide social programs, the statement expresses concern that the IRS presently is neither organized nor funded to do the job effectively. “I’ve no doubt the IRS is capable of administering social programs, including healthcare,” Ms. Olson said.

“But Congress must definitely provide sufficient financing and the IRS itself must notice that the skills and training required to administer social advantage programs are extremely different from the abilities and training that employees of the enforcement company typically possess. While some enforcement measures are required to prevent inappropriate claims, the overriding objective of firms that administer sociable advantage programs is to help as many eligible persons be eligible for the benefits as it can be.

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That requires outreach and working one-on-one with potentially eligible individuals. Ms. Olson suggests that the IRS objective statement be modified to explicitly recognize the agency’s dual role as part-tax collector and part-benefits administrator. Such a revision would require the IRS to develop a proper plan that provides sufficient focus on both functions and would underscore that the IRS requires sufficient funding to perform both functions effectively. During FY 2011, TAS will continue steadily to advocate for improved taxpayer services and can continue steadily to make the case that taxpayer service is important not only as a courtesy but as drivers of tax compliance as well.

2. New Business and Tax-Exempt Business Reporting Requirements. The report expresses concern a new reporting requirement contained in the Patient Protection and Affordable Care Act may impose significant compliance burdens on businesses, charities, and government agencies. Yr 600 or even more throughout a calendar. To meet this requirement, these businesses and entities will have to keep track of all purchases they make by vendor.

600, the average person must issue an application 1099 to the vendor and the IRS showing the precise amount of total purchases. The provision will have broad reach. 3. IRS Collection Practices. The report expresses carrying on concern that IRS collection methods emphasize the collection of past-due liabilities even where doing so inflicts unnecessary or disproportionate harm on taxpayers and jeopardizes future taxes collection. “The conventional wisdom seems to be that more hard-core enforcement actions like liens and levies suggest more revenue,” Ms. Olson said.