Tax time 2012: tips for businesses and individuals: with tax season right around the corner we turned to Jack Allgood, tax partner at Anton Collins Mitchell LLP for advice on tax issues in 2012.deficit spending Deficit spending
When government spending overwhelms government revenue resulting in government borrowing.
Expenditures that are in excess of revenues during a given period of time. , has the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. stepped up the audit process?
A. Yes, clearly the IRS has increased the numbers of returns being audited. The IRS audits more small companies than big ones and the gap is widening - a policy that costs both the IRS and its targeted taxpayers. As you might imagine, per an average audit hour, the audit of large companies yields a significantly larger collection of tax dollars than audits of small companies.
Q. What areas is the IRS focusing on?
A. For starters, foreign reporting and international activities. In March of 2009, the IRS issued an internal memo to ensure examinations with offshore transactions and entities continue to be emphasized and receive priority treatment during the examination process.
Also, corporate reorganizations. Tax returns containing tax-deferred reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. transactions are receiving increased attention. This is particularly true in the case of reorganizations involving an outbound change -- from the U.S. to a foreign country -- in place of an entity's legal organization.
Independent contractors also are being looked at. Whether a worker is an "independent contractor A person who contracts to do work for another person according to his or her own processes and methods; the contractor is not subject to another's control except for what is specified in a mutually binding agreement for a specific job. " or an "employee" has long been a controversial audit issue. For the most part, classification centers around the payer's right to "control and direct" a worker with respect to the job that is to be done and how he or she should do it. If the requisite control conditions are present, the worker should be classified as an employee.
Q. What should taxpayers do when they receive notification that the IRS wants to audit their income tax return?
A. Taxpayers should contact their income tax preparer or adviser as soon as possible to arrange for representation before the IRS. The representative and the taxpayer should then arrange a meeting to discuss the items that might be audited, and the audit process - all the way from the notice through the appeals process. This will establish expectations and should help ease the taxpayer's concerns.
Q. What are some of the new reporting requirements that taxpayers should be aware of?
A. Form 8938 (Statement of Specified Foreign Financial Assets Financial assets
Claims on real assets. ). This new two-page form requires disclosure by individuals of specified foreign financial assets, if in the aggregate the values exceed $50,000. This reporting requirement targets accounts maintained with foreign financial institutions or investments in foreign entities, investments and contracts with a foreign person, and foreign stocks and securities. This reporting is intended to help the IRS identify and track a taxpayer's foreign investments.
Also, Schedule UTP UTP (uridine triphosphate): see uracil.
(Unshielded Twisted Pair) See twisted pair.
UTP - unshielded twisted pair (Form 1120) - Uncertain Tax Position Statement. For the reporting year 2011, certain corporations that issue or are included in audited financial statements and have total assets equal to or greater than $100 million are required to file Schedule UTP with their income tax returns.
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|Title Annotation:||EXECUTIVE edge|
|Comment:||Tax time 2012: tips for businesses and individuals: with tax season right around the corner we turned to Jack Allgood, tax partner at Anton Collins Mitchell LLP for advice on tax issues in 2012.(EXECUTIVE edge)|
|Date:||Feb 1, 2012|
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