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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.
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.