^^^ and that ties directly back to my earlier post. Over the past few years, the IRS has been developing automatic reporting from the 'spending' side that allows them to detect unreported income. If you buy a house or condo, and in some cases if you lease a house or condo or apartment, an automatic report is generated to the IRS. If you register a car, motorcycle etc. the state DMV makes an automatic report to the IRS. If you take out student grants / loans or pay college tuition, Sallie Mae and your College's Bursar's office automatically report to the IRS. Any 'cash' purchase / transaction over $3,000 ( may be higher in some states ) generates an automatic report to the IRS. And even when the amounts are smaller, banks or money order sales outlets ( including the USPS ) may generate automatic reports to the IRS based on 'suspicious' activity. And of course banks, brokerages, retirement accounts etc. also generate automatic reports to the IRS. In addition, the IRS maintains a cost of living database which tracks the average cost of rent + food + utilities etc. for every different zip code area.
Thus it's super easy for IRS computers to add up all of the money that these automatic reports show that a particular person spent last year, tack on that person's zip code based probable cost of living spending, and compare that total to the amount of income the person actually reported on their tax return. If there is any significant discrepancy, an audit / investigation is likely to soon follow. And this is particularly the case for people who work in business segments where historical 'tax compliance' has been abysmal / under-reporting of actual income has been standard procedure ... specifically 'adult businesses' like strip clubs and adult oriented internet businesses !!!
In fact, as part of the National Health Care Law, IRS funding was increased for the specific purpose of nearly doubling the number of IRS agents last year ! Also, a targeted enforcement unit was formed for the specific purpose of increasing audits / investigations for business segments ( like adult businesses ) where historical 'tax compliance' has been abysmal ! The 2011 tax year will be the first time that these new IRS resources will be 'turned loose'. So we really don't know whether particular tax deductions that have successfully 'flown' in the past will still 'fly' this year !!! What we do know is that this year's tax returns will be 'looked at' more thoroughly than in any previous year.



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I was just a wee bit concerned because some states require for a nurse to sign off an IRS disclosure form before getting a license... But I guess those are just the states that I won't be able to live in if I want a job :/ . I also hope that in the future, more employers won't require signing a full IRS disclosure form in order to get a job. Even if I wasn't camming, signing off on an employer to know everywhere you've ever worked and how much you made is ridiculous and in my opinion, kind of crosses the line.



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