Hiding Income? IRS Is Now Offering Settlement
The Internal Revenue Service’s war on tax cheats continues as it announces
a settlement initiative. If you’re evading taxes, here’s some advice:
settle. Now!
By Stanley H. Block
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:
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The agency has increased
enforcement revenues by nearly 28 percent, from $33.8 billion in 2001 to
$43.1 billion in 2004.
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A settlement initiative
targeting the “Son of Boss” tax shelter netted $4 billion in
settlements.
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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.
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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?
Stanley H. Block is a Maryland State Tax
Attorney and a member of the American Society of IRS Problem Solvers. You
can contact him at 410-727-6006 to obtain a free subscription to his newsletter
titled The IRS Times & Inquirer.
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