Posted on 09/01/2009 7:19:50 AM PDT by reaganaut1
The Internal Revenue Service will expand a program designed to catch tax cheats that searches for inconsistencies between mortgage payments and income.
After prompting from an IRS auditor, the agency will study whether it should make greater use of data on mortgage-interest payments provided to it by banks. The IRS currently uses such data to send notices to non-filers who it believes should have filed a return.
The data could also be used to target for audits individuals who don't file tax returns, or who report less income than they paid in mortgage interest, according to a letter released Monday by the Treasury inspector general for tax administration.
The IRS move will expand a regional research project on mortgage interest to a nationwide level by December 2011. Such initiatives, called Compliance Initiative Projects, typically involve examination of a small number of tax returns to evaluate new enforcement strategies.
Howard Levy, a tax attorney with the Cincinnati firm Voorhees Levy, said 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.
"That [IRS Form] 1098 might be one of the few trails IRS could pursue to find out if there is income coming in," Mr. Levy said.
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.
(Excerpt) Read more at online.wsj.com ...
The IRS wants money -- they will ignore the deadbeats, and go chase the people who actually pay their bills. That's where they money is.
Government is a criminal operation and should be prosecuted under RICO.
What’s reported to the IRS by lenders is mortgage interest, and since many people do claim the mortgage interest deduction, it is reasonable for the government to get such info from banks to check that interest deductions are reported correctly. What I am very wary of is the government using the mortgage interest data for other purposes.
Somebody do a Dave Ramsey Ping. If the government is going to look over your shoulder, it is time to pay off the stupid things.
Y'see, little people have to pay their interest bills with real income, unlike the feds, who are on the point of borrowing the money to pay the interest on the national debt.
it just doesn’t pay to be a responsible person anymore.
Really the key point. Information might want to be free, but it doesn't come for free. Ergo it's a tax and a waste of productivity and ultimately a theft of our labor. It's just slavery, really.
Grr. The state franchise tax board of california recomputed our 2007 tax liability for reasons yet unknown. They did this on friday (aug 28) and then sent a withholding notice to my employer received yesterday (aug 31). The amount matches the amount of a payment we made for 2007 in Feb. 2008, said payment cashed and applied already.
We speculate this is a purposeful scheme designed to extract extra cash from us, acknowledge the error, and hold (i.e. use in cash reserves) the amount until the 2009 return is sent in, where it will be applied/refunded.
I don't think we're just paranoid. They've attempted the same trick 4 times in the last 12 years. In the second attempt the employer didn't let me know until the amount had been deducted (and they erroneously took the full amount of my check and sent it off to the state!). We didn't get the cash back for 17 months!
If the state doesn't lift the order in time we're filing new withholding forms and reserving the net estimated tax liability in escrow. We'll fix it at the end of the year.
bttt
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