Flife:
WASHINGTON -- The Internal Revenue Service will expand a program designed to catch tax cheats that searches for inconsistencies between mortgage payments and income.
Health care reform means more power for the IRS | Washington Examiner
Democratic Health Care Bill Divulges IRS Tax Data - Taking Liberties - CBS News
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This is a big topic right now. I think it is important to understand the implications of increased scrutiny on these deductions for taxpayers who are paying a mortgage for a home that they live in, but do not legally own.
I did some research on a recent tax court case that may interest some of you. You can see it here: http://blog.flamfinancial.com/?p=64
One of the biggest changes that has happened in the last decade or so is how much cross-checking the IRS now does. It used to be if you forgot a small W2 or you and your estranged wife both claimed your children as dependants it would have flown under the radar. Not any more at all.
Way back in the 1980's the IRS began scoring tax returns for flags of what might constitute a bogus return. This scoring does not result in an automatic audit but auditors look over returns with hight scores to choose which ones are suspicious. Now way on earth would twenty thousand per year in mortgage interest but no income not be suspicious? I frankly would have presumed that this was part of the scoring all along,
One Republican lawmaker cautioned Monday that the IRS plan could snare taxpayers who have coped with job losses by borrowing or using savings or retirement accounts to make their house payments.
"We shouldn't presume that these struggling families are tax cheats just because they continue to make their mortgage payments despite losing their income," said Rep. Charles Boustany (R., La.), the ranking minority member on the House Oversight Subcommittee.
Highly paid former employees of investment banks who lost their jobs in the financial crisis but who, thanks to their savings, are still making their mortgage payments, could also draw scrutiny under the IRS plan, said Tom Ochsenschlager, vice-president for taxation at the American Institute of Certified Public Accountants
They cannot snare somebody who has done nothing wrong.
What's new ? This has been a standard procedure for the IRS since the development of computer based screening.
i agree with but I can see what will happen. the little guey who owes 2000 to 20000 will pay it all but the guy that owes 500000 will pay 10% that is how it is done and how they will always do it. they think getting some is better then none at all. that is what is BS
We shouldn't presume that these struggling families are tax cheats just because they continue to make their mortgage payments despite losing their income," said Rep. Charles Boustany (R., La.), the ranking minority member on the House Oversight Subcommittee.
No, we should not target the families and label them as tax cheats when we have cheats like The Fed, The Banks, Wall Street, Giethner...did I leave anyone out? Oh yeah, all of our congressional reps and those pesky lobbyist.
IRS: If you want money, look to the loop holes that allow businesses and millionaires to hide their money in off shore accounts evading taxes. You can also, tax political contributions from corporations. You can track money that changes hands between lobbyist and congressmen. Just leave the innocent families the heck alone, they have been Scr*wed enough by the system. I had a friend who paid her mortgage via her credit card until she found a job after being laid off a year and a half. You would know this had she been allowed to claim the interest on the Credit card...put your efforts where they will actually be productive.
You are so right.
This is just proposing to do on a large-scale (computer screening, probably) basis what they have done informally for years.
We got audited back in the mid-1980s, when I had just set up my own business. They definitely wanted to know how we were living on what we had declared as income. It helped a lot when we pulled out documents showing our monthly mortgage payment was only $183 or so, plus that we'd used some inherited money for a 50% down-payment.
If they want to use this screening to find people who have over $20,000 in mortgage interest alone and don't even file a tax return, as the article says, that sounds like a good use of resources. Those folks may have a reasonable explanation for not owing any tax -- but not for not filing a return at all.
just audit the Fed
^best post^
...and mortgage payments.
I guess that the IRS crunched their numbers and discovered based on stated incomes it doesn't seem plausible that these same people are able to afford the mortgages that they are carrying. That's my guess.
You're right that's ALL they're thinking. There are many honest legitimate reasons that can account for the disparity but this program assumes that anyone in this situation is guilty until proven innocent.
They will cruelly harrass many innocent people to maybe catch a few abusers because real big time tax cheats are way too sophisticated to get caught like this!
Ha! Going to audit mortgage payments. IRS will need only a single auditor. How about auditing the banks that are forcing these foreclosures or better yet, why the he// don't they begin with AUDITING THE FED!
"inconsistencies between mortgage payments and income."
I guess a lot of bells will be ringing at the IRS. All those people with ARM loans.
IRS- bring it on- I don't cheat----------
You have time for an audit??? Most people DON'T cheat.
"Warren Buffett, the third-richest man in the world, has criticised the US tax system for allowing him to pay a lower rate than his secretary and his cleaner.
Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion), said: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”
think about Warren, supposedly takes a salary of 100 grand,,,heck that doesn't even pay for his greens fees or his jet fuel....WHAT A JOKE our tax system is....He is a full fledged member of the Leona Helmsley club as he owes almost a billion.....Think about it, how much has he paid in income tax in his life and how much is he worth....THERE IS A REASON for inheritance taxes and it is because of ALL THE LOOPHOLES for people like him....
People like him? He's giving his entire fortune to charity. He's given or giving $40 billion to charity. What a terrible, uncharitable soul he is.
Besides giving billions in bailouts to large corporations and banks (who aren't lending to small business) and spending billions to send more troops to Afghanistan-
this is the single most important foolish and unfair economic move that Obama can make.
When the small business owners and independent contractors realize what's going on, Obama and the Democrats will surely lose future elections.
Maybe this IS the Republican strategy, so that Obama and Democrats will lose big-time in future elections.
Obama still has Bush's appointee running the IRS. Many of these initiatives were started or proposed under BUSH. But guess who is going to take all the blame. WAKE UP OBAMA!
bingo
"mortgage-interest data might be the best source of information the IRS has on small-business owners, such as roofers or carpenters, who are paid in cash and don't report all their income to the IRS."
This is crazy! The bureaucrats at the IRS are completely out of touch with reality. How many small-business owners, such as roofers or carpenters are even surviving right now?
Bureaucrats at the IRS, have salaries, pensions, great heathcare, paid vacations, work only 8 hr day, their job responsibilities are very narrow in scope, and God-forbid they ever work with their hands.
How could they even BEGIN to understand what it takes to run a small business and survive in these times.
This kind of initiative is highly discriminatory!
Okay, so it's okay to go after rich people who hide money in foreign accounts, but other tax cheats are off limits?
Enforcing the law is discriminatory?
Of course not. Everyone should pay their fair share.
But to target time-consuming, expensive audits on the population that is the most economically vulnerable is actually foolhardy and bad for America.
Good! Tax cheats should be found and made to pay up. If there weren't so many tax evaders we would be able to pay for health care and education.
OK you just go right on believing that your tax dollars will actually benefit the average joe.
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First Posted: 09- 1-09 01:09 PM | Updated: 09- 1-09 01:30 PM