Here's a nextgov article on an Obama proposal to move money into more after-the-fact tax auditing automation (the "Automated Under-Reporter System"). In other words, run more matches of 1040 data against other available databases. A trade group for government contractors criticizes the idea, saying IRS should focus on avoiding such things from happening.
In other words, suppose FSA issues a payment to a tax ID. It reports the payment to IRS. IRS expects the tax ID's 1040/tax return to reflect the FSA payment.
In my experience, asking IT people to do a batch match of two files was easy, and that seems to be what we're talking here. Yes, it'd be nice to avoid problems upfront, which is why FSA is supposed to be checking estate ID against death records and asking IRS to verify AGI is under the limits. But if the local landlord of an FSA/NRCS office forgets to report a rental payment, or the person who transcribes an appeal hearing forgets to report the services check, I've no problem with an after-the-fact check. People should pay their taxes, period, whether it's Wesley Snipes or Jane Doe.
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