October 2018 Archives

The rules of rollover waivers

Generally speaking, Maryland residents and others have 60 days to rollover funds from a 401k or IRA into a new IRA. Failure to meet this deadline could result in negative tax consequences. However, there is a chance that the IRS could allow a person to avoid financial penalties for failing to complete a rollover in a timely manner. This may be possible if a bank or other financial institution makes an error during the rollover process.

IRS audits continue to decline

While many Maryland taxpayers fear audits, the Internal Revenue Service is actually checking up on fewer people. The shrinking number of tax audits has been highlighted by news coverage of allegations that President Donald Trump and his family members failed to pay hundreds of millions of dollars in taxes. In 2017, only one out of every 160 tax returns were audited, marking 0.6 percent of 245 million returns. For six years, the number of audits has declined annually, and it has now reached its lowest level in 15 years.

Specific reasons grant IRS unlimited time to pursue unpaid taxes

Statutes of limitations generally prevent the Internal Revenue Service from investigating tax returns that are older than six years. For most returns filed by taxpayers in Maryland, the IRS only has three years to audit the reported income. If the agency suspects that income has been substantially underreported by 25 percent or more, the law provides up to six years to initiate an audit and pursue taxes and penalties. Three major exceptions to these limitations, however, remove time constraints and grant the agency's civil division the power to review returns of any age.

TIGTA says IRS not using currency reports from banks

The Treasury Inspector General for Tax Administration has released a report indicating that the Internal Revenue Service makes little use of bank currency reports. Many Maryland residents are aware that if they deposit more than $10,000 in cash at any one time, their bank will send a report of the transaction to the IRS. Chances are that the IRS will never look at a particular currency report.

IRS private collections program less successful than expected

A tax collection program that relies on private companies to chase down debts brought in just more than it cost to set up and operate, according to an audit by the Office of the Inspector General. The Internal Revenue Service set up the program based on legislation from 2015 to pursue overdue taxes in Maryland and across the U.S. The expectation of lawmakers was that these companies would net $2.4 billion for the U.S. Treasury by 2025.

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