The IRS audits nearly 1.5 million tax returns every year. But how do they decide which returns should be audited (or "examined" in IRS terminology)?
Michigan taxpayers already understand the complexity of filing taxes. Unfortunately, any mistake made in the filing of taxes can result in penalties or a possible tax audit. That is the sort of attention we all would prefer to avoid.
A recent federal court decision demonstrates the determination of the IRS in tracking down offshore revenue. The federal court authorized the agency to use a John Doe summons in order to locate information about American citizens holding offshore accounts in Panama. Specifically, the IRS desired to use such a summons to locate accounts linked to debit cards.
Possibly fearing retaliation by the IRS, many taxpayers do not take advantage of certain available deductions. You do have a legal right to take these deductions without fear of an IRS audit.
The IRS has numerous resources and law enforcement tools available to collect taxes. Every return faces scrutiny, and mistakes on the return can lead to an IRS tax audit. It is important for Michigan taxpayers to remember that audits frequently result in fines, penalties and possibly imprisonment.
Federal regulators put the earned income tax credit (EITC) in place to benefit low- and moderate-income individuals. The EITC particularly benefits individuals with children. Families with three or more qualifying children could claim up a maximum of $6,269 as a result of the EITC. And taxpayers without children could also qualify. The EITC differs from other credits in that even individuals who owe no tax may be eligible for a refund.
President Donald Trump's first few weeks in office have been met with a flurry of activity from the White House. Among the many proposals President Trump has for his administration is a tax plan that could cut the total number of tax brackets from seven to three and eliminate the estate tax.
The IRS has at its disposal a large number of options for pursing offshore account information. For example, there was a recent federal court action that allowed for the IRS to serve a John Doe summons to access offshore account information tied to debit cards. The IRS uses such a tool to access information that could possibly reveal violations of tax laws.