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Wilmington NC CPA Firm comments on Interesting IRS Issues in March

CPA Wilmington NC comments on IRS issues

Gary Bode, CPA: we follow IRS developments as part of the job. If you'd like a free initial consult with a Wilmington NC CPA and tax accountant, please give us a call at 399-2705.

As many Americans are in the middle of tax preparation, the IRS had some interesting developments.

$1.1 Million Paid to Enron Whistleblower

The IRS Whistleblower program hasn’t been all that active. Our previous post on the subject delineated how the IRS can pay you 15% of taxes discovered by your tip. I think the IRS Whistleblower program hasn’t been more successful because Americans typically don’t tattle, the rewards are vaguely defined and the process takes a lot of time to percolate through the IRS system.

But it did pay an anonymous Wall Street type $1.1 Million for an Enron whistle blowing tip. Enron and similar scandals like Madoff typically are treated as white collar crime. We instinctively cringe when a street thug robs someone at knifepoint. But folks who steal millions from thousands often get a slap on the wrist. So, this is a good example of a positive result from an unpopular IRS program. And an example of how the IRS sometimes actually helps protect taxpayers, in this case from fraud.

IRS Internal Controls Reported as Problematic

Per an article in Accounting Today: Specifically, the IRS did not consistently implement controls that were intended to prevent, limit, and detect unauthorized access to its financial systems and information, the GAO found. For example, the agency did not sufficiently restrict users’ access to databases to only the access needed to perform their jobs; secure the system it uses to support and manage its computer access request, approval, and review processes; update database software residing on servers that support its general ledger system; and enable certain auditing features on databases supporting several key systems. In addition, 65 of 88—about 74 percent—of previously reported weaknesses found in earlier GAO audits remain unresolved or unmitigated.

I think this is probably typical for any government agency. While it sounds bad, implementing such changes is difficult while keeping the IRS up and running. And, these very same internal controls make it harder to get information from the IRS. They have everything so compartmentalized; no single person seems to be able to access everything I would expect if it was a private company. As a Wilmington NC CPA, I think I understand how remarkable the IRS in all its ability. That might be an unpopular opinion. But you have to respect their effectiveness in light of the obvious enormous challenges it faces.

IRS Subcontractors were paid despite Owing Taxes

The IRS doesn’t handle everything internally. A scandal has developed concerning the fact the IRS paid these folks $356 Million while these subcontractors owed $3.8 Million in back taxes. OK. But the subcontractors know how to work the system and keep those back taxes in dispute.

We’re a CPA firm in Wilmington NC. Why do we track IRS developments? Just part of our job to follow IRS regulations as they develop. Tax Court cases help us gauge where a tax loophole may develop and/or close. Tax regulations evolve as more taxpayers contest, exploit or abuse them. Since we stay in tune with the IRS, lots of stories like the above come our way. If you’d like a gratis initial consult, please consider calling us at (910) 399-2705. With the Internet and cell phones, we can represent you even if you aren’t lucky enough to live in the Wilmington NC area. We offer tax preparation, both personal and business.

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