To assess taxpayers’ income without their agreement, the IRS is typically required to go through a lengthy procedure. There is, however, one exception to this requirement, which is the math error exception under Section 6213 of the Internal Revenue Code. Under this code section, the IRS can assess additional tax due to a math or clerical error on the taxpayer’s return.
Unresolved IRS tax problems can continue to worsen over time. In addition to penalties and interest accruing, options to dispute tax issues become fewer, making it essential to respond to any IRS notice in a timely manner. In cases where this isn’t possible or was simply overlooked, however, there may still be other options to dispute IRS tax assessments, penalties or collection actions.
Recent estimates by the Internal Revenue Service (IRS) indicate that nearly $1 trillion in legally owed taxes go uncollected each year, making addressing this gap a major focus for both the IRS and Biden administration. In fact, it has been proposed by the current administration to increase the IRS’s budget by $80 billion over the next 10 years.
Health Savings Accounts (HSA) have become increasingly more popular choices for both employers and individuals as they look to offset the rising costs of healthcare and insurance premiums. In fact, according to the 2020 Midyear Devenir HSA Research Report, the HSA market will approach 35 million accounts by the end of 2022, holding over $100 billion in assets.
In 2010, the Affordable Care Act (ACA) was passed and signed into law, requiring employers with 50 or more full-time employees to offer minimum essential coverage to at least 95 percent of their full-time employees. If coverage isn’t offered or if the coverage offered isn’t affordable, the employer can face an IRS assessment known as an Employer Shared Responsibility Payment (ESRP).
Each year, the Internal Revenue Service assesses millions of tax penalties against individuals and businesses. If you have received an IRS penalty notice, you are not alone. In 2019, the IRS sent over 40 million penalty notices and assessed over 40 billion dollars in penalties. More than 60 percent of these penalty notices involved just two offenses: delinquency (failure-to-file) and failure-to-pay.
Today’s “gig economy” lends itself to temporary jobs, short-term contracts and flexible work arrangements between businesses and the professionals providing services. Since the beginning of the gig economy following the Great Recession, the number of contract workers has grown to more than one third of the total workforce in the U.S. With an increasingly remote labor force, this growth is expected to continually increase.
The possibility of an IRS audit haunts many businesses, but what factors contribute to that risk? For example, have business processes been implemented to sufficiently capture required documentation, such as withholdings and withholding taxes? Has the business been consistent with its accounting methods?