Stepping Up Tax Collection Enforcement In California

The tax man is poised to gain more clout. So said The Wall Street Journal earlier this month. Tax help may become necessary more than ever especially for those who are near my office who live and work in Los Angeles County, Santa Barbara County, Ventura County and Orange County. Using a tax attorney, even a Los Angeles based tax attorney for enforcement issues arising anywhere in the country, may become more ubiquitous.

The tax gap must be reduced if Congress is to fund programs and reduce the budget deficit without significant tax increases. Tax law enforcement is the clarion call once again. The tax collector wants to close the annual $290 billion tax gap.

The IRS will have new tools to track under-reported income. “The primary focus would be requiring certain business middlemen, such as credit-card processors, to provide more data about other businesses’ transactions” said The Wall Street Journal. The data would be used to report to the IRS each year on the aggregate amounts charged at a variety of businesses, such as restaurants and dry cleaners. The IRS could use the data to cross-check income that businesses report on their tax returns.

Congress is looking at whether to apply new reporting requirements to processors of online transactions. Congress may also require stock brokers to report the initial purchase price of stocks sold rather than just the sales price as the law now requires; this will provide better data on investment gains.

An underfunded IRS may also see an increase in its budget to enhance operations.

Field audits, office examinations and tax collection actions will reduce tax avoidance activities followed by the 17% of taxpayers who are not paying their full tax burden. Improving tax collection and compliance by one percent brings in another $25 billion a year.

Taxpayer rights will be protected, says the IRS, even in the face of new collection efforts.

When faced with enforced collection, using a tax attorney with Internal Revenue Service tax experience, a master’s degree in tax law, and an employment history with the Internal Revenue Service, is an option available now. Call Mitchell A. Port at (310) 559-5259.