THE IRS AUDITING SYSTEM HAS BECOME MORE EFFECTIVE

The IRS is currently increasing their focus on corporations and on individuals with higher incomes. The IRS completely reorganized earlier in 2003. By 2006, its auditing had become much more efficient! They continue to improve. They now focus on areas like high income use of tax shelters.

• IRS computers compare every one over a billion W-2's & 1099's and compare Social Security numbers of taxpayers and their children. When discrepancies are found, The IRS computers send out automated notices. The IRS receives much of this information electronically from banks and brokerage houses.

• The IRS is targeting specific problem areas they have identified. They are also becoming more efficient with their collections. One of Speaker of House Pelosi's specific concerns is about the amount of uncollected income tax that is outstanding.

• The IRS compares K-1's from partnerships and other entities against individual returns. They couldn't do this for years. Now they do - and very well!

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