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Friday, Jun 9, 2023

IRS Preparing New Campaign Against Cheats

BY MICHAEL ROZBRUCH Even the most casual observer must have noticed: The Internal Revenue Service has declared war on tax cheats. Take, for example, some recent news from the IRS: The agency has increased enforcement revenues by nearly 28 percent, from $33.8 billion in 2001 to $43.1 billion in 2004. A settlement initiative targeting the “Son of Boss” tax shelter netted $4 billion in settlements. U.S. Tax Court can now impose a fine for taxpayers who bring frivolous arguments as to why they are allowed not to pay income taxes. The IRS has obtained more than 100 court-ordered injunctions against tax promoters. And the IRS isn’t finished yet. The tax-collecting agency has announced the creation of another settlement initiative geared toward bringing more U.S. tax cheats in compliance with the law. The initiative, which runs through January 23, 2006, allows taxpayers who have taken part in a variety of abusive tax shelters and transactions to come forward and avoid substantial penalties. The initiative covers abusive schemes that “range from complicated, risk-free offsetting currency transactions to products sold to small businesses involving health insurance plans. The transactions were marketed to wealthy individuals, large corporations and small business taxpayers,” the IRS announced. So far, the IRS has identified 4,000 taxpayers using 21 applicable schemes to avoid income taxes. If these taxpayers come forward now and cooperate with IRS agents, they could avoid having to pay maximum penalties. “People entered into these deals often at the behest of lawyers and accountants peddling flaky tax products,” said IRS Commissioner Mark W. Everson. “Times have changed. The IRS has acted to shut down these deals, as has the Congress, in passing stiffer disclosure requirements and promoter penalties last fall. We’re offering taxpayers a quick, quiet and cost-effective way to put these deals behind them.” Taxpayers who come forward during the settlement initiative will be required to pay 100 percent of the taxes owed, interest and potentially either a quarter or a half of the penalty the IRS will otherwise seek. Additionally, the IRS offers penalty relief to taxpayers who received bad advice from an independent tax advisor. According to the IRS, the government has offered this new program due to the incredible success of the “Son of Boss” initiative. That resulted in $4 billion in settlements. If you’re using an abusive tax scheme, don’t you think it’s time to settle up? Michael Rozbruch is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a CPA. You can contact him at 818-774-1813 to obtain a free subscription to his newsletter.

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