April, 2011

Message from Nelson & Company, P.S., CPAs

What are your chances of being audited?

1.1% of individual income tax returns filed in FY 2010 were audited compared to 1% last year. Of the total individual returns audited in 2010, 30% were returns with earned income tax credit (EITC) claims. About 21% of the audits were conducted by revenue agents, tax compliance officers, tax examiners and revenue officer examiners; the remaining bulk were correspondence audits.

4.7% of returns with Schedule C were audited, but only .4% S-Corporations or Partnerships were. If you're a business owner, this is another good reason to drop the Schedule C.

So what did the audits result in? The IRS has collected about $55 Billion per year for the past few years. For FY 2009, the IRS assessed 27.1 million civil penalties against individual taxpayers - up from 26.39 million the previous year. Of the FY 2010 assessments, the top penalties (in percentage terms) were 57.3% for failure to pay, 27.3% for underpayment of estimated tax, and 13% for delinquency. For businesses, the IRS assessed a total of 1,145,931 civil penalties - up from 970,098 for the previous year, and 42.1% of these were for either failure to pay or underpayment of estimated tax.


NELSON & COMPANY, P.S.
Certified Public Accountants

IRS Times & Inquirer

Inside This Issue...

Scorsese, Pacino Hit with IRS Tax Liens


IRS Agent Nailed on Tax Charges

Director Martin Scorsese and actor Al Pacino, both members of the Hollywood elite, received liens for unpaid federal taxes.

Scorsese, famous for gangster movies including Goodfellas and The Departed, was slapped with a $2.85 million tax lien. The New York Post reported that the director's problems could be a result of his business relationship with Kenneth Starr, who was convicted of fraud for running a $33 million Ponzi scheme.

Also reportedly affected by Starr's fraud is Al Pacino, famous for his roles in The Godfather and Scarface. According to a tax lien, Pacino owes $188,000 in unpaid taxes.


 

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Nelson & Company, P.S., CPAs Since 1979

====NOTICE REQUIRED BY IRS====
Circular 230 Disclosure:
To ensure compliance with requirements imposed by the IRS, we inform you that (i) any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

 

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