Starting in October, 2007, the Internal Revenue Service
will soon be conducting a Random Audit Program. This type
of Random Audit was done in the past, sometimes with
unpleasant results.
According to the Wall Street Journal ("The Next Audit
Scare," by Tom Herman, June 13, 2007) the Internal Revenue
Service plans to revive its controversial practice of
randomly selecting thousands of taxpayers for audits even
when there is no reason to suspect any wrongdoing. The
first audits will begin in October, 2007, and will target
13,000 people of various incomes for Tax Year 2006.
The reason for this program may be because the IRS is under
pressure from Congress, which is struggling with budget
deficits, to take action on the gap between what the
government is collecting each year and what the government
feels it should be collecting.
The amount of this "difference" is estimated to be $290
billion. Random tax audits have troubled many people in the
past. In the 1990's, when the IRS imposed a similar
program, many of these targeted individuals felt the audits
were invasive. Individuals were made to produce vast
amounts of paperwork to support even trivial items on their
returns.
What will the "new and improved" Audit Program look like
this time around? Some people chosen for this auditing may
not even realize it's happening to them. The audit will
all be done completely by computer without their
knowledge. The IRS will be able to check the information by
making comparisons of what the person reports on their
return against what was reported by employers and financial
institutions. Many people will need to endure
face-to-face meetings with IRS Agents in order to examine
their numbers in greater detail.
And what was the track record of the IRS like, when we
think back to those bad old days of the IRS Audit? Not
completely flawless, it turns out. According to CNN.com
(All Politics, April 28, 1998, "Senate Panel Hears Stories
of Alleged IRS Abuses") a Senate committee commenced
hearings on the abuse of power by the IRS. There was
testimony from taxpayers about IRS Agents "stepping over
the line" even raids on peoples' homes, IRS Agents behaving
"out of control" and acting "undisciplined." These Agents
were described as "intrusive" and "intimidating." During
these hearings, Cody Mayo, an Assistant DA in Caddo Parish,
Louisiana, described how one individual actually
experienced an emotional breakdown during an audit, and how
another case tragically resulted in the victim's suicide.
There was testimony that the IRS retaliated against
whistleblowers. Yvonne DesJardins, of IRS Employee and
Labor Relations, appeared as a surprise witness. She
described how people who just wanted to do the right thing
were "ostracized," and their "careers destroyed."
Meanwhile, IRS officials who engaged in any misconduct were
protected -- or even rewarded.
What will you do if you sadly discover that you need to
persevere through one of these face-to-face audits? You
might feel that you need help.
Do Taxpayers Have Any Rights? Thankfully, Taxpayers do in
fact have rights. In fact, many of us might not know that
there is a "Taxpayer Bills of Rights." (IRC Section 7521)
Some highlights of the "original" Taxpayer Bill of Rights
include the following:
1. Taxpayers have a right to an explanation of the audit
process, their appeal rights, and the collection process;
2. Taxpayers have a right to be represented by a
representative authorized to practice before the IRS;
3. Taxpayers have a right to suspend an interview to
consult with a representative, provided the interview was
not arranged through the use of an administrative summons;
and,
4. Taxpayers have a right, with advanced notice to the IRS,
to make an audio recording of any IRS interview.
Of course, the revised Taxpayer Bill of Rights (TBOR) is
much longer and much more complex. You can view this
entire thirty-page long document by going to the IRS
website www.IRS.gov.
----------------------------------------------------
Eno, Boulay, Martin & Donahue, LLP is a Lowell,
Massachusetts law firm specializing in both business law
and business solutions for clients in Massachusetts and New
Hampshire. The firm deals with issues relating to
government regulation including state and federal tax
collections issues, bankruptcy, business conveyancing and
commercial transactions, environmental matters as well as
business litigation. Call: 978-452-8902 or
httpwww.ebmdattorneys.com
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