The owners of a Southern California test pilot school pleaded guilty to filing a false 2008 tax return. They transferred money from their corporation to several offshore accounts, then deducted the transfers from their corporate and individual income tax returns. Then they failed to report the interest on the foreign accounts. Maybe it goes without saying, but this is not allowed. Now they will have to pay upwards of $2 million in penalties on top of their $710,000 tax bill. I think its safe to say that their options for tax relief are limited at this point. If they don’t have the cash to pay it all at once, that’s going to be one big installment payment!
Your social security number (SSN) is actually made up of three different numbers: the 3-digit area number, 2-digit group number, and 4-digit serial number. This is the way its been done since social security numbers first started being assigned back in 1936. But later this month the Social Security Administration (SSA) is going to begin assigning numbers randomly. This will make additional numbers available that are currently restricted due to the area number. Basically, it will take longer for the SSA to run out of numbers. Also, the randomization method of SSN assignment is supposed to better protect the integrity of the numbers. Bad guys won’t be able to figure out the first 3 digits based on state. Even after this change, the SSA will still not be using 000, 666, or 900-999.
Yesterday the Electronic Tax Administration Advisory Committee (ETACC) released its yearly report to Congress. This 14-member committee was created in 1998 and submits annual progress reports to Congress each June. The ETACC report is always near the top of my summer reading list. But I have been known start at the bottom of my list and work my way up.
One of the key topics that this committee reports on is the IRS’ 80% electronic filing goal. ETAAC believes there are four main areas that the IRS needs to focus on in order to achieve this goal.
- Continue to encourage/require tax preparers to file electronically. In the 2012 tax season, tax preparers who file 11 or more returns will be required to e-file.
- Reduce the number of e-file rejects (current rejection rate is 15-20%).
- Increase the number of e-filed returns prepared at home (i.e., some people use filing software, but then print and mail the return).
- Continue to encourage those who prepare their returns manually to step over into the information age. One way the IRS is doing this is by ceasing the practice of automatically sending paper forms to taxpayers.
The June 9th IRS headline read “One Billion Served: IRS E-File Passes Major Milestone” (see news release IR-2011-64). The IRS has tallied the number of tax returns filed electronically since the e-file program began back in 1986, and the number has recently crept above one billion, including a whopping 100 million during the 2011 filing season. These days nearly 80% of all taxpayers file their returns electronically. If you employ a tax preparer to file your taxes, your tax preparer may be required to e-file, depending on the number of returns he/she files. This has definitely contributed to the success of the program.
According to the IRS, e-filing benefits both the taxpayers and the government. Taxpayers get faster refunds and more accurate returns, and the government spends less money processing them; according to the IRS, up to 20 times less. Cheaper and quicker – maybe the IRS is following in the footsteps of McDonald’s. Now if they could only process a return in the amount of time it takes to build a Big Mac. Then they they’d really have something.