Audits on Police deductions.

[geekgirldany]

http://www.thetaxbook.com/forums/showthread.php?t=1200&highlight=FIREFIGHTER+MEALS

Above is a thread on it. The firefighters here told me they took their meals from home. They wanted a per deim. So in my case it did not work. If it is an organized mess required by the employer that they contribute to then yes it is deductible re the thread above.

[tacks]

Excellent thread, thanks to all of those who contributed.

The OP indicated that the local police new he was taking a risk on their behalf. Sounds like they need to go to jail as well?

This brings up a good question which I've often wondered about. Did the taxpayer/client actually know of the preparers wrongdoing? (knowledge and intent) Or do they honestly believe that the other preparer is simply better?

I'm thinking that several of those police officers probably wouldn't really know if their own 2106 forms were prepared correctly or not. They might have thought:

1 this other guy gets bigger refunds for people

2 none of this other guy's clients got audited (not yet anyway)

3 this other guy is so confident in his ability he offers a 'money back guarantee' (i'll
pay half the tax if you're audited)

It seems as though some of them might have honestly thought that this guy was simply a better preparer.

(granted people have accused me of being naive. and on occaisions they've been right)

[tacks]

Well said

Also, there really needs to be more of this from the IRS. Many of us lose business to the guy across town because we won't take phony deductions and he will. This is where the real IRS enforcement money needs to be spent...

Well said, i strongly agree. From what i've the irs takes far too long to catch up to these shady preparers (if they do at all). By the time the QP, 'questionable preparer,' is caught...

1) he's already put many many taxpayers/clients at risk -- 'pushed them under a bus,' so to speak (and some of them absolutely are innocent!)

2) he's already produced tons of bigger refunds for clients using BS deductions without getting anyone in trouble. He's already been flying under the radar for far too long. Thus the layman concludes that he's more competent and more knowledgeable than we are.

I understand that the irs has been understaffed for some time. And that it's often more difficult to nail the shady preparer than it is to nail the poor schmuck who has got the BS deduction on his 1040.

(this is, of course, true moreso with low income clients whom irs agents view as having lesser 'audit potential.')


Sorry for the rant.

[AuditorTurnedGood]

Well, if the IRS won't crack down

the state certainly can. I know here in MN, the Dept. of Revenue has it's fradulent preparer project in full swing, and has had for about 6 years now. When ever I find someone in this business who is seriously undermining the law and those of us that know what we're doing, I get as much info as possible and pick up the phone. I'm not sure about the rest of the country, but here in MN, the Revenue department has no lack of funding or resources.

Brilliant thread, BTW.

ATG

[Nashville]

MN police

Earlier confessed to a couple of TN traffic violations, but also in 2007 got one from a Minneapolis cop who said I turned on red. I decided to write the district attorney, pointing out that in my 40+ yrs of driving I have had 9 moving violations and over half of them had been out-of-state (my point being that police are precipitously biased toward out-of-staters). She did write back and found my verbage "interesting" and never heard anything else.

For all you Yankees, Westerners, Midwesterners, whatever, I would like to tell you we don't do those despicable things when you visit Tennessee, but alas, our police like out-of-state money too. You guys don't vote here, I suppose.

[Nashville]

Funding Problems

I found out about 10 years ago the long arm of the MN law for state income taxes from an Alabama customer who fled the Great Prarie owing your state. I've always heard their collections were aggressive, but I swear I think that state could collect from the moon.

Of all the ridiculous arguments I've heard from government, perhaps the flimsiest is this thing about not having enough funding to pay an audit staff. I would be willing to bet that the IRS audit staff collects about 300% of what the cost is to run their audit division. So how can you make an argument that you "don't know where the money is coming from?"

[JohnH]

Speaking of auditing & collections, here's a little tidbit from today's news. Anybody want to bet how much of this enforcement eventually focuses on individual taxapyers and corps rather than the offshore stuff?

http://www.reuters.com/article/pressReleasesMolt/idUSTRE5464DP20090507

I'm betting the administration will decide that this is a lot better source of revenue than trying to run auto companies and financial institutions. After reading this, I'm thinking about raising my rates again...

[Nashville]

Low Hanging Fruit

John, they've always gone after the easy stuff. The "low hangin' fruit" as opposed to the tough stuff that ties up their lawyers and highly paid personnel. Can you imagine the cost and fallout from going after the bank accounts in Switzerland? Much cheaper to program another 25 million mostly wrong CP-2000 notices.

Go after Microsoft or General Electric? Forget it. Go chase down illegal EIC recipients? Forget thst one also, they are too many and too transient. Who does that leave? You're right John. SIX MUNTHS AGO I CUDN'T EVEN SPEL CAYMIN ILANDS, NOW I ARE ONE!!

Ever been to Philadelphia in the summer (or anywhere in the Northeast)? Seen the outdoor fruit and veggie markets doing thousands in cash business? Not a chance you will see a Treasury agent go into one of those.

I've said since the beginning of this recession that the boldest and most desperate attempts and tax enforcement will come from hard-strapped state and local governments. I could have been wrong.

[JohnH]

Exactly. Law enforcement is most effective when the greatest effort is expended against law-abiding citizens who occasionally stray over the line. I'm not suggesting that law enforcement officers of all types don't do some dangerous and dirty work - they definitely do that. But the best return on investment of time and resources is to turn the screws on people who have a lot to lose by not complying - they will generally pay the fines & penalties with a minimum amount of push-back.

[erchess]

Observation

In NC we have people who will sell stuff in store parking lots or by the sides of heavily traveled roads. I guess most of them probably are operating under the table on a cash basis but I've very seldom bought anything from one of them or thought about their tax situations. It does seem like to me it would be cost effective for the NCDOR to go after these folks by stopping and checking ID then making appointments to audit for sales tax. They would of course have to check out vehicle tags and driver licenses and make sure there was a match. If sales tax was found to be significantly out of compliance there could also be audits of their complete returns.

[Snaggletooth]

Cash Scam

I guy I grew up developed a scam and used it numerous times.

Bought a refrigerated truck, and went to Nashville to a huge regional food distributor. Bought meat, fruit, and produce and would drive to a medium-sized town about 150 miles away in KY. Would find a huge parking lot somewhere and pretended that his truck was broke down. Sold meat and produce off the back of the truck to the public at bargain prices, pretending that his refrigerant would give out soon and the food would spoil if he didn't find someone to sell it to FAST. Scheme would turn around $4-$5K per load.

A few days later, more food, and the truck would move to GA, MS, TN or wherever he could find a medium-sized town. Of course, no license, no sales tax, nothing. Had to make sure he didn't hit close to the same town twice. Told me once that a couple locals chased them down at gunpoint to rob them of the cash and had to race them out of town.

Don't know whatever happened to him...

[AuditorTurnedGood]

I've always heard their collections were aggressive, but I swear I think that state could collect from the moon.

I would be willing to bet that the IRS audit staff collects about 300% of what the cost is to run their audit division. So how can you make an argument that you "don't know where the money is coming from?"

On the first point yes, the Minnesota Collections Enterprise will stop at nothing to get the money this state is owed. The siezure unit even has windbreakers bearing their name. There was one collection attempt that made news about 4 years ago. They rolled up to a "non-resident" tax evader's 2.8 million dollar house in an exclusive private community, and within 2 hours of serving the Writ of Entry, had impounded everything in the house, down to the grandkid's dance costumes.

To the second, that was how our current govener has tried to stick to his "no new taxes" pledge he made when first elected about 6 pr 7 years ago. If you give the department 40K for a new auditor, they will likely find about 5 times that amount of non compliance in their first year.

[kaimana]

Good for you! I sincerely applaud you

Preparer turned good
I got shot down badly for suggesting that we professionals should have no problem with turning in this type of preparer (from posters on this very forum). I am very happy to see that I am not the only one.

Where can I research how MN handles their program?
Thank you

[Black Bart]

Funny, but not really.

Exactly. Law enforcement is most effective when the greatest effort is expended against law-abiding citizens who occasionally stray over the line. I'm not suggesting that law enforcement officers of all types don't do some dangerous and dirty work - they definitely do that. But the best return on investment of time and resources is to turn the screws on people who have a lot to lose by not complying - they will generally pay the fines & penalties with a minimum amount of push-back.

I recently saw a 2008 report by the Treasury Inspector General for Tax Administration (IRS' overseer) which read "...while IRS has successfully developed processes to identify (italics mine) fraudulent EITC claims, they have not been able to develop a process to stop such claims and the majority of them are paid ..." That's progress of a sort I suppose.

TIGTA reported a couple of years ago that convicts in prison were claiming EITC and -- incredibly -- Head of Household status. Many were paid as IRS said they didn't have the manpower to deny/check them. Not much point in audit, I guess -- what could you threaten them with? Jail?

[tacks]

Of all the ridiculous arguments I've heard from government, perhaps the flimsiest is this thing about not having enough funding to pay an audit staff. I would be willing to bet that the IRS audit staff collects about 300% of what the cost is to run their audit division. So how can you make an argument that you "don't know where the money is coming from?"

Thanks for posting, Nashville.

I believe that you're correct about the IRS audit division pulling in more money than they spend. But i understand that they remain understaffed despite this fact. The federal government had a hiring freeze a few years back -- no were agents hired. Meanwhile many agents are coming in to retirement at a rapid rate.