In general, the Internal Revenue Service treats a cancellation or discharge of debt as income. You may wonder how you are to pay tax on the cancelled portion of a loan, if you did not have the money to pay the debt in the first place. Only the debtor who […]
Category: Audits
When homework was completed with a pen and paper, the excuse that the dog ate your homework was plausible. It could happen, although it has always been unlikely. As everyone moves to digital, the excuse becomes the dog chewed up the flash drive or maybe the external hard drive. Recently, […]
Tax audits are not all of the same type. Many people may think of a face-to-face encounter with a revenue agent when they hear the term “tax audit.” Audits of this type, conducted by a revenue agent at a local office of the IRS or at a business location, are […]
Political commentators sometimes opine that in a democracy, we get the government we deserve. As a broad sociological statement, perhaps there is some truth in this statement. For individual taxpayers, however, it is difficult to understand why the IRS fails to provide better customer service. In this post, we will […]
Part of mature thinking is being able to weigh the odds. This doesn’t mean gambling. It means knowing the likelihood that something will happen and tailoring actions accordingly to attain specific goals. In this post, we will consider tax audits as an example of this. It makes sense for a […]
It’s an annual ritual in recent years, one that reflects the dysfunctional, deficit-driven dance of an overly contentious Congress. One again, Congress is letting numerous tax breaks expire. But because Congress also has a pattern of reinstating those breaks months later in a piecemeal manner, the result is to make […]
Tax audits are one of our most frequent themes in this blog. Most recently, in a two-part post on October 29 and November 4, we discussed how errors by the IRS in scanning and cataloging documents from taxpayers have affected the correspondence audit process. In this post, let’s look at […]
In the first part of this post, we noted that problems with accurately scanning documents have been hindering the ability of the IRS to conduct correspondence audits effectively. This is a concern because many potential tax issues are resolved through the paper-driven correspondence process, rather than through a full-scale, in-person […]
In the hit TV series “Mad Men,” set in the early 1960s, it is a very big deal when the advertising office — in state-of-the-art New York City — gets its first copy machine. The bulky machine operates as both a cultural curiosity and a not-so-subtle sign that things are […]
The partial shutdown of the federal government is now in its second day. The shutdown is “partial” in that some services remain operative while others do not. In Texas and across the nation, people are therefore asking themselves what is open and what is not. National parks are easily the […]