Wednesday November 9, 2022 – The IRS calls an audit an “Examination of Returns.” The IRS accepts most federal tax returns just as they are filed. Some returns, however, are selected for review. The IRS selects returns for audit by computerized screening, random sample, or by an income document matching program.

An examination can take place in several ways. Some audits are handled exclusively by US Mail, in the taxpayer’s home or place of business, at an IRS office or at your representative’s office. The time, place, and manner of the audit are negotiable.

Attorney Steven A. Leahy reviews the 11 things you need to know to avid an IRS audit (plus one bonus).

Monday November 7, 2022 – This space has been reporting on the Cash App law created by the American Rescue Plan of March 2021. The law changed the tax reporting requirements for third-party payment apps from 200 Transactions AND $20,000 or more to $600 or more, no matter the number of transactions.
This change went into effect on January 1, 2022. That means the new rule won’t really come to light until February 2023 when the information Returns must be delivered to taxpayers. Third-party payment apps, like Venmo, paypall, Cash app, etc. are subject to this rule.

But, early on, Zelle let consumers know they were not subject to this new rule. Because Zelle is not a third-party payment app. Instead, Zelle is a bank-to-bank payment service not subject to the 1099-K reporting rules.

Attorney Steven A. Leahy will take a close look at Zelle’s claim on Today’s Tax Talk.

https://www.bloomberg.com/news/articles/2022-11-07/zelle-becomes-loophole-for-business

Wendesday November 2, 2022 – The IRS has recalculated the guesses they made in 2014 – 2016. And, to one’s surprise – the estimates were raised.

The estimates are made up of people who do not file taxes; underreporting, or taxes that are understated on returns that are filed timely; and underpayment, or taxes reported, but not paid, on time.

The outgoing Commissioner Charles Rettig said, “The increase in the tax gap estimates reflects that the IRS needs to do more, both in improving taxpayer service as well as working to improve tax compliance.”

The estimates for the most recent tax reporting year, 2020, vary widely, for $250 Billion to $1 Trillion, depending on who and why the number is being reported.

Attorney Steven A. Leahy looks at the latest estimates on Today’s Tax Talk.

https://cbs4local.com/news/nation-world/irs-finds-number-of-unpaid-taxes-rises-fueling-growth-of-tax-gap-internal-revenue-service-audits-income-charles-rettig-inflation-reduction-act-treasury-department

https://www.journalofaccountancy.com/news/2022/oct/growing-tax-gap-shows-need-better-service-compliance-irs-says.html