- The Washington Times - Monday, November 6, 2006

The IRS plans to conduct more audits of taxpayers in the upcoming tax season compared with previous years, the agency’s commissioner said yesterday.

“I think there will be more,” IRS Commissioner Mark Everson said.

The federal tax-collection agency is refining its methods for identifying tax cheaters, which includes new uses of data from the 73 million returns filed electronically this year, Mr. Everson said. The IRS also is considering collecting tax information from new sources, which he called “third-party reporting.”

Accountants say third parties could include stock brokers or contractors whom taxpayers hire to help them with personal business and home repairs.

Mr. Everson spoke at a downtown hotel during a meeting of the American Institute of Certified Public Accountants.

In his 3 years as commissioner, the IRS has doubled the number of audits, particularly for corporations and high-income taxpayers, he said.

“It’s no longer viewed as OK to stretch on your taxes,” Mr. Everson said.

IRS watchdog groups support tougher tax enforcement only if the audits focus on corporations and wealthy individuals who are most likely to skip out on their tax obligation.

“We’ve been encouraging them to go against the people who are not complying with the law,” said Bob McIntyre, director of Citizens for Tax Justice, a nonprofit advocacy organization for fair taxation. “That would be a good way to balance the budget without burdening the average taxpayer.”

Mr. Everson said the federal government collected $2.4 trillion in revenue this year, which was $600 million more than last year largely because of IRS enforcement.

Nevertheless, he said tax cheating remains a problem. By some accounting estimates, about $300 billion per year in taxes is unpaid.

The greatest failures to report income were “pretty clearly on the small business side,” Mr. Everson said.

He could not give more details of how tax enforcement in the upcoming year would be tougher, saying Congress has not approved the agency’s annual budget.

Some new enforcement methods might involve making better use of computerized information from electronic filers, he said.

“The analysis of that data will generate whole new ways of doing audits,” Mr. Everson said.

Accountants generally said the IRS has become more effective in recent years.

In the 1990s, IRS personnel often were poorly trained and slow to complete audits, said Michael Niles, a certified public accountant from Portland, Maine.

“It made our job difficult,” Mr. Niles said. “If there was an issue or an audit, it took a long time to get resolved. I think it is getting better.”

Tom Ochsenchlager, vice president for taxation of the American Institute of Certified Public Accountants, said the IRS does a better job of communicating with accountants compared with a few years ago.

“We’ve had a very good relationship with them,” Mr. Ochsenchlager said.

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