The IRS has recently begun to focus on the accuracy of information contained in Schedules A, C, and E. They are doing this by informing tax preparers that, while they may rely in good faith on client information, they may not ignore the implications of information that may be suspected to be untrue, incomplete, inconsistent, or inaccurate. What this means for you, the taxpayer, is that your tax preparer will be asking you to provide more details for anything they feel could put you under further IRS scrutiny.
The IRS has identified the most common issues as follows:
- Unreimbursed employee business expenses
- Travel, meals, and entertainment
- Charitable contributions
- Fully reporting gross receipts for your business
- Expenses must be ordinary and necessary and paid during the taxable year
The IRS will be visiting tax preparers now and through April 15th , 2012 to see that they are knowledgeable in tax law and prepare accurate returns while exercising due diligence. If they discover any inaccuracies in client returns while performing these examinations, the clients may be liable for additional tax, interest, and penalties.
What can you the taxpayer do? Provide as much detail as possible to your tax preparer for them to document that the information on your returns is true, complete, consistent and accurate. Only report expenses that you can fully substantiate as an ordinary and necessary business purpose. A little preparation now can prevent some expensive headaches later!
Pursuant to IRS Circular 230, the Internal Revenue Service requires us to inform you that any tax advice included herein is not intended or written to be used, and it cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by the IRS on the taxpayer. That said, please do not hesitate to contact us if you have any further questions regarding this matter.Tags: IRS