Taxpayers Beware! The IRS Shifts Its Collections Efforts Into Overdrive

 

The average American's wallet has probably felt quite a bit lighter in the past few years. And so has the IRS'. Like much of the American public, the years-long recession has the IRS lodged firmly between an economic rock-and-a-hard-spot. But, unlike most Americans, the IRS' vast network of resources, both monetary and from a personnel standpoint, pretty much guarantees that it won't go hungry.

Due to the economic downturn, the amount of tax that the IRS has collected has decreased 3.3 percent, while government spending continues to increase. Although about 84 percent of all taxes are paid on time by taxpayers, the other 16 percent who either under-report income or overstate deductions results in about a $300 billion per year loss to the IRS. In order to combat these substantial losses, the IRS has ramped up its tax collections efforts through the addition of thousands of new IRS employees and smarter, more powerful computers designed to sniff-out taxpayers who aren't paying. Child visitation. These efforts are aimed principally at the individual taxpayer because the underreporting of individual income tax is the single greatest component to the annual tax gap, i.e., the missing $300 billion per year.

Those taxpayers who should be most concerned with the IRS' heightened collection efforts are high-income taxpayers, self-employed individuals and taxpayers who received pass-through income from partnerships, S-corporations or LLCs, or those persons who claim deductions which are well in excess of reported income. Also on the chopping block are those individuals who fail to file tax returns entirely. It is suspected that increased examinations, quicker assessments and stronger collections efforts will be seen in connection with these non-filers.

So, although times continue to be tough for pretty much everybody, the IRS is taking a hard line on the soft economy. Taxpayers are well-advised to carefully and timely report and pay over all income tax owed because if they don't, the IRS WILL come knocking.