IRS Aims at Non-Filing Businesses

Finally, the IRS gets off its collective duff and go after non-filers:

The IRS plans to take a closer look at businesses that fail to file tax returns, and identify more of themhe agency cannot develop a comprehensive estimate of the number of businesses that do not file returns because it lacks data about the population of all businesses, but it could use the inventory of business non-filers it already has on hand to determine noncompliance, according to a new report by the Government Accountability Office, which noted that the IRS identifies several million potential business non-filers each year, more than it can thoroughly investigate.

Why is this news? Because the IRS would rather spend its budget on terrorizing the compliant - the fish in this barrel over here who are easy to shoot - than going after the non-compliant - the fish in that other barrel way over there, who are too hard to shoot and aren't much fun to shoot at anyway.

The IRS thinks it spends too much time and effort hunting down the non-compliant and the potential payback is negligble, dollar-wise - most non-compliant taxpayers are non-compliant for a reason: they're off the grid because they don't earn that much money anyway; you won't see a company like GM not filing a tax return but the handy-person down the street who works for cash has more incentive to underreport his income or not file at all. After the chase, these kinds of cases rarely give up a lot of tax dollars and when they do, the taxpayer is rarely in a position to pay. That kind of budget expenditure requires the IRS to do a lot of 'splainin' to Congress and there's one thing the IRS doesn't like to do and that's 'splain itself.

No, rounding up non-filers won't make a significant dent in the deficit but the sense of fairness - you're filing your returns and paying your taxes, why isn't the IRS going after that guy who isnt? - will go a lot farther in promoting voluntary compliance with the tax laws than disallowing reasonable deductions. Taxpayers may grumble about paying taxes but what they grumble about most, and tempts them to cheat even more, is perceived unfairness in the system. It's not fair you should try to play by the rules of the game when others don't even show up to play.

So if you haven't been filing, the IRS will be looking for you. Finally. Get caught up. I happen to know a pretty good CPA who can help you out.