Taxpayers, beware: IRS warnes of new taxpayer penalities

The IRS has recently warned that it is stepping up its efforts aimed at taxpayer audits. High net worth taxpayers, small business taxpayers, rental property owners, a among a large group of taxpayers that may now face new IRS audits.


In addition the IRS is warning of new penalties and fines for taxpayers if they fail to follow the tax rules. Reporting items without records, or failing to report income, or making up deductions are just a few of the growing list of issues that new examinations will be looking for.

Tax Issues:
Follow Up Action Print out this ALERT and provide to
Inform all clients that is an important issue and to review their
requirements under the new taxpayer penalty issues.

Tax Professionals may face penalties for preparing returns where there are no formal books and records. Clients may be required to reconstruct their books and records before they can file a return.

Compare differences in prior year tax returns with current year return:
Review bank records against gross receipts for differences
Review any large dollar transactions
Look for comingling in corporate books and records
Review any independent contractor expense (AUDIT ISSUE)
Advise all clients of potential higher audit risk this year

– TAXPAYER ADVISORY BULLETIN
This year should see in some cases, an estimated 200% increase in number of IRS audits and examinations. Taxpayers should be advised of following:

• Review records and receipts
• Review bank records for unreported income
• Review receipts for deductions claimed
• Keep all records for possible audit
• Do not make up numbers for your return
• Make sure to compare information to return
• Maintain good records for business or rentals