|Taxes 2007: The IRS will take closer look
|By Kay Bell Bankrate.com
When 2007 rolls
in, you can be sure of one thing:
The Internal Revenue Service
will be taking a longer, closer,
harder look at all of us taxpayers.
starting to be more persnickety,"
says Donna LeValley, tax attorney
and editor of the annual "J.K.
Lasser" tax guide,
of federal tax agents. As evidence,
she points to recent law changes
that give the IRS more power
to question taxpayer deductions.
Now, the agency
can disallow claims of donated
goods that don't meet its standards,
as well as demand receipts for
charitable cash gifts of any
amount. Previously, the IRS
took the taxpayer's word on
the value of clothing or household
items that were given to nonprofits,
and only donations of $250 or
more required documentation.
These moves are just the latest in IRS filing oversight efforts that began a couple of years ago when the rules on auto donations were tightened.
The latest changes,
says LeValley, are the proverbial
shot across the bow of the taxpaying
public. While there is still
some question as to how the
agency will actually implement
such things, as checking on
donated goods' value, the message
to filers is clear: We're
people more on guard,"
says LeValley. "As if most
people weren't already on the
edge when it comes to taxes."
Why the increased eye from the IRS?
"It has to do with the tax gap," says LeValley. This is the amount of money the IRS says it has good evidence that it is owed, but which the agency has not been able to collect. The topic was the subject of several Congressional hearings in 2006 and the U.S. Department of Treasury, overseer of the IRS, recently announced its plan to shrink the gap.
"The overall trend is toward tighter enforcement," says LeValley. "The IRS is going to go after every dollar they're supposed to get."
Such efforts have already begun. Despite Congressional concerns, this fall the IRS started sending private debt collectors after taxpayers who haven't paid up. The agency is cracking down on charities and churches that it suspects of conducting political activities in violation of their nonprofit tax-exempt status
And the IRS plans to resume random audits, last conducted several years ago, in which selected taxpayers will have an IRS examiner look over every line of their returns. These filers are not suspected of tax cheating; rather, the agency says the exams are a way to gather information that will help them catch scofflaws.
Such actions, Uncle Sam hopes, should keep taxpayers on their toes and keep tax money coming into the treasury.