I know you are all law-abiding citizens.
However, sometimes accidents happen (and I don’t mean with toasters). Maybe you moved, forgot about the few months you worked a temp job last year and never received that W-2. So, you file your return, in good ignorant faith, and now the IRS says you have some explaining to do.
While it’s highly doubtful you’d see the inside of Folsom Prison for this oversight, it could cause you more than just a little headache.
First off, the Internal Revenue Service will catch this unreported income. They use a dandy little tool called the Information Returns Processing system (IRP). According to Debt.com, “this is a huge database that reviews the earnings you report (or don’t report).” The IRS compares what you say you earned to “the information third parties provide.” These are going to be banks, your job, pension services, etc. And here’s the neat thing: if something doesn’t quite add up, an IRS agent is going to be a little curious.
You don’t want a curious IRS agent.
For a mistake like the scenario above, chances are that you’d “likely be forced to pay the correct amount of taxes owed, as well as a penalty” (Sapling.com). Okay, that’s not great, but not the end of the world, either.
But, wait! What if the scenario wasn’t just an innocent teeny whoopsie? What if (and I know you wouldn’t do this) you intentionally set out to file a fraudulent tax return? What if you deliberately “forgot” a whole lot of income?
Hey, have you met Al Capone?
According to Sapling.com, “people who do not report income on their taxes seldom end up in jail.” However, it certainly does happen. Not only to Al, but Leona Helmsley, Wesley Snipes and a slew of reality television stars. The biggest consideration to the IRS seems to be intent. Accidents can be forgiven with a little money; deliberate “accidents” can be forgiven with a lot more money and a few years of your life.
If the worst case happens and you do find yourself being audited, the great thing about Bourke Accounting experts is that they aren’t intimidated by a curious IRS agent. Of course, Bourke Accounting professionals have a healthy respect for the IRS, but intimidated? No. They are willing to give it their all to protect you from a 6X8 extended stay residence. Having intelligent warrior accountants like the ones you’ll find at Bourke Accounting can really improve the view.
Written by Sue H.