Fort Worth Tax Law Blog

The IRS looks for revenue wherever it can find it. In recent years, for example, the agency has becoming especially aggressive at going after what it perceives to be unreported income from offshore accounts.

Another example is worker classification audits. The IRS has done many of these in Texas, looking for employers trying to avoid payroll taxes by classifying certain workers as contractors when they are actually employees.

But foreign account and worker classification enforcement are hardly the only avenues the IRS takes in its search for tax revenue. Yet another instance of this is the agency’s recent action against colleges that the IRS suspects of underpayment of taxes on employee compensation and on businesses they own.

Is the IRS reading your e-mail?

The IRS says it is not. Yesterday the acting commissioner of the IRS denied allegations that his agency gains access to taxpayers' e-mail messages without obtaining search warrants.

In Texas and throughout the nation, taxpayers are naturally concerned about the IRS gaining too much access to their personal communications. Such concern is only natural for privacy reasons. And of course the stakes are even greater when possible tax evasion charges could result from a criminal investigation.

In a nation based on the values of liberty and equality, someone's income level shouldn't really affect their chances of an IRS tax audit. After all, equality before the law is such a key value for us as Americans.

You'd think, then, that it shouldn't matter whether you are rich, poor or middle income. The likelihood of having your tax return audited wouldn't depend on your income. In Texas and across the country, belief in that type of fundamental fairness is practically an article of faith.

And yet, when one looks at the data regarding who actually gets audited, it is clear that high-income taxpayers are more likely to be audited than those of lower income.

In order for the law to be fair, the rules must be clear enough so that people can use them as a guide. Unfortunately, that is not really the case, many people believe, with IRS payroll audits of small businesses regarding suspected misclassification of employees.

In Texas and across the country, the IRS has been increasing such audits, looking for evidence that employers may have classified independent contractors as employees. The agency is concerned that employers might do this in order to avoid payroll taxes, specifically Social Security and Medicare tax payments.