New Visitors Privacy Policy Sponsorship Contact Us Media
Baby Boomers Family Green Home and Auto In Critical Condition Just Starting Out Lifestyle Money
-advertisement -
News & Advice Compare Rates Calculators
Rate Alerts  |  Glossary  |  Help
Mortgage Home
Auto CDs &
Retirement Checking &
Taxes Personal

2006: A look back - A look ahead  
  Taxpayers cleaned up with new credits last year, but be forewarned: Big Brother will be looking more closely in 2007.
 Personal finance calendar  Personal finance calendar 

Taxes 2007: The IRS will take closer look

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.

"They're 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 watching you.

"It puts 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.

-- Posted: Nov. 1, 2006
Page | 1 | 2 |

- advertisement -
- advertisement -

About Bankrate | Privacy Policy/Your California Privacy Rights | Online Media Kit | Partnerships | Investor Relations | Press Room | Contact Us | Sitemap
NYSE: RATE | RSS Feeds |

* Mortgage rate may include points. See rate tables for details. Click here.
* To see the definition of overnight averages click here. ®, Copyright © 2016 Bankrate, Inc., All Rights Reserved, Terms of Use.