Hopefully, your tax house is in order--because the IRS is
watching. "The IRS has committed itself to more vigorous
enforcement, along with its step-up in service," says the
IRS' Don Roberts. "It is now focusing on corporate and
high-end noncompliance and promoters of abusive tax
shelters."
As part of this push, the IRS' new commissioner, Mark W.
Everson, recently announced a series of steps to improve agency
operations, in effect freeing up funds for enforcement. In 2005,
the IRS plans to close its Memphis, Tennessee, tax-return
processing operations and stop processing paper returns at that
location, given the huge increase in electronic filing: Since 1990,
the number of returns filed electronically has grown from 4 million
to 53 million in 2003. In addition, the IRS will consolidate the
number of offices set up for exam, collecting and insolvency cases
from 92 locations to four.
"Savings from these initiatives will allow the IRS to hire
more people to pursue cheating by high-income individuals and
corporations, continue our attack on abusive tax shelters, bolster
our criminal investigation efforts, and assist with other
enforcement priorities," Everson said when announcing the
reorganization. He also plans to add more than 2,000 enforcement
positions in 2005 to boost the agency's ability to collect the
taxes it is owed.
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Another objective is to reduce the time it takes to develop a
criminal tax case and to resolve corporate audits. "While it
is important that care be taken in ensuring that both possible
criminal matters and corporate audits are thoroughly evaluated,
timeliness is also important in ensuring that the right criminal
cases and the right corporate audits are pursued," explains
Roberts.
Everson has already taken a number of steps to achieve these
objectives. For example, the IRS has established a new nationwide
partnership with individual states to aggressively pursue
tax-avoidance schemes. Under the agreement, the IRS will share
information on abusive schemes and those taxpayers who participate
in them.
The new commissioner also appointed an experienced law
enforcement and tax professional, Mark E. Matthews, as IRS deputy
commissioner for services and enforcement. In addition to leading
the agency's efforts to continue the drive for better taxpayer
service, Matthews will focus on prioritizing enforcement
initiatives.
With more resources dedicated to frontline enforcement, more
agents will be reviewing tax filings and dealing with taxpayers who
may not have paid their taxes. They'll also be pursuing
criminal investigations to determine whether criminal sanctions are
necessary.
Great Falls, Virginia, writer Joan Szabo has reported on tax
issues for 17 years.