Each year the IRS releases a Data Book that recaps Internal Revenue Service activities for the prior fiscal year ending in September. The 2012 Data Book was recently published which recaps the 2011 tax year. Here is what you need to know:
Of specific interest was the data that recapped two of the major automatic programs in place at the IRS; the Automated Under Reporter Program and the Automated Substitute for Return Program.
Automated Under Reporter Program
|Results: The 2.2 billion information returns received by the IRS identified 4.5 million discrepancies resulting in $7.1 billion additional tax assessments.|
|Action: This program is an efficient way for the IRS to find missing revenue. Make sure you receive all your information forms and that the information stated on them is correct. Errors can be corrected on your tax return, but it is always best to get your employer or provider (bank, brokerage or customer) to issue a corrected 1099 or W-2 form.|
Automated Substitute for Return Program
|Description: This is the IRS computer program that uses third party information and automatically creates a tax return with that information if you do not file one.|
|Results: This program identified 803 thousand non-filed tax returns. The created returns yielded an additional $6.7 billion in tax assessments.|
|Action: If 1099s or W-2s have been issued, the IRS expects you to file a tax return or will do it for you if you don’t. While it is possible that this might create a refund, do not expect the IRS to grant you all your available deductions. It is always best to file a return, or file an extension if needed to provide some time to get your information to them.|
The IRS Data Book is loaded with useful information. Next month: What is your chance of being Audited? A look at updated IRS audit information.
As always, should you have any questions or concerns regarding your situation please feel free to call.