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Wednesday, December 29, 2010

IRS Declined to Audit 97% of Potential Tax Shelters Without Required Approval

TIGTA The Treasury Inspector General for Tax Administration yesterday released Internal Controls for Surveying Tax Returns With Abusive Tax Avoidance Transactions Need to be Strengthened (2010-30-118):

IRS employees made decisions to survey tax returns with Abusive Tax Avoidance Transaction (ATAT) issues without proper approval. From a statistical sample of 311 surveyed tax returns, TIGTA determined that 246 required the Planning and Special Programs function to concur with the group manager’s decision to survey the tax return. However, group managers did not follow guidelines and surveyed 238 (97%) tax returns without approval from the Planning and Special Programs function. Additionally, in 88 instances, TIGTA could not determine why the tax returns were surveyed because justification was not included in the case files or did not support the decisions to survey the tax returns. TIGTA projected the IRS could have examined 840 additional tax returns and proposed additional tax assessments totaling $1.7 million over a five-year period. For 278 (89%) of the 311 surveyed tax returns, TIGTA found that IRS employees did not follow procedures when surveying tax returns with ATAT issues. TIGTA projected 196 taxpayers’ rights could have been jeopardized under § 7605(b) because the IRS surveyed tax returns after contacting taxpayers.

http://taxprof.typepad.com/taxprof_blog/2010/12/irs-audited.html

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Comments

Sounds interesting. Should we worry that it's: (a) politics, (b) corruption, or (c) breaking unimportant regulations to save time?

Posted by: Eric Rasmusen | Dec 29, 2010 8:01:19 AM

SurPrise, SurPrise!

Posted by: GPyle | Dec 29, 2010 9:15:11 AM

Sounds interesting. Should we worry that it's: (a) politics, (b) corruption, or (c) breaking unimportant regulations to save time?
Posted by: Eric Rasmusen | Dec 29, 2010 11:01:19 AM


Probably all three. The real question is what proportion in each of the categories?

Posted by: cubanbob | Dec 29, 2010 9:33:59 AM

That depends, was yours one of them?

Posted by: grichens | Dec 29, 2010 10:00:19 AM

Meh. The rules are for the little people. Hasn't the government taught you that?

Posted by: Ellen | Dec 29, 2010 11:14:12 AM

Rules? We don't need no stinking rules round here, amigo...we do what we want. We are IRS, a power unto ourselves...and just wait until we own your healthcare AND your paycheck!

Posted by: Harry Schell | Dec 29, 2010 11:38:19 AM