Tax laws have become increasingly convoluted in an attempt to enforce taxation and stifle potential abuse. Laws, rulings, provisions, and letters have been and continue to be put in place to thwart these non-compliant tax payers as the tax gap (the difference between the tax that taxpayers should pay and what they actually pay on a timely basis) continues to grow. The IRS National Research Program (NRP) has been studying the tax gap and the composition of the increasing deficit. The NRP stated, "Preliminary Findings Support Enforcement Efforts, Tax Reform Everson said the study confirms two key points involving tax enforcement and simplification.

“The IRS needs to enforce the law so that when Americans pay their taxes, they are confident that neighbors and business competitors are doing the same,” Everson said. “At the same time, this research underscores the President’s call for tax reform. Complexity obscures understanding. Complexity in the tax code compromises both the service and enforcement missions of the IRS. Those who try to follow the law but cannot understand their tax obligations may make inadvertent errors or ultimately throw up their hands and say ‘why bother.’ Meanwhile, individuals who seek to pay less than what they owe often hide behind the tax code’s complexity in order to escape detection by the IRS and pay less than their fair share.”

The President has called for a nearly 8 percent increase for enforcement activities in the administration’s 2006 IRS budget request. The additional funding will increase audits of corporations and high-income individuals as well as expand collection and criminal investigation efforts".

Knowing that again in the 2007 tax year the IRS is increasing their efforts to reduce the tax gap means that it is more important than ever to know that your accounting is correct and that you are operating in a compliant manner. Using an accounting professional with experience and your best interest in mind will help reduce the odds of unnecessary audits.

Additional information can be found on this topic on the IRS website at: http://www.irs.gov/newsroom/article/0,, ... 47,00.html



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Alternative Minimum Tax...the tax most of us have become familiar with as it's ill equipped parameters have left many people in decreasingly lower tax brackets subject to payment. Understanding the tax and how it is applied can help us to perform effective tax planning that will reduce unnecessary tax liabilities.

Additionally, understanding the impact that the recent tax cuts from President Bush have had on the tax and how a lack of future tax cuts on the AMT may impact you as a tax payer is important.

The link below is to an article that provides some great insight into the AMT.

http://www.taxpolicycenter.org/taxtopics/AMT.cfm

Please feel free to share your thoughts on this topic.


Jeremy Slaughter

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