New IRS Program Filters Out Tax Cheats

Just hours now before your 2012 Federal and State income taxes are due and the IRS is tax cheats it may be harder to get by with it this year.

According to a recent study by the National Taxpayer Advocate large clusters of potential tax cheats in five major  metropolitan areas, including the metro Atlanta area.  The IRS uses the information to target taxpayers for audits – especially small businesses.

The study focused on small-business owners – sole proprietorships, to be specific – because they have more opportunity than the typical individual to cheat on their taxes.

Many small businesses deal in cash while most individuals get paid in wages that are reported to the IRS.

The study also looked at tax compliance in different industries, and found that people who own construction companies or real estate rental firms may be more likely to fudge their taxes than business owners in other fields.

As millions of procrastinators scramble to meet tonight’s deadline to file their taxes, the IRS is running every tax return through a confidential computer program to determine the chances of collecting more money from an audit.

Each tax return is assigned a score.  The higher your score, the more likely you are to get audited because, according to the IRS, the more likely you are cheating on your taxes.  The score is called the Discriminant Inventory Function, or DIF.

A high DIF score does not guarantee you are a tax cheat but the IRS claims it’s reliable.

And for those taxpayers who are having trouble paying their tax bill, IRS spokesman Mark Green said it’s important to get in touch with the IRS as soon as possible.  He says talking to the IRS now will help you avoid problems later.

“That’s probably one of the biggest pitfalls that taxpayers fall into because when there is a tax liability, some taxpayers tend to push that to the side hoping it will go away, but it will not,” Green said. “By all means, communicate with us.  Request an installment agreement to work out a payment plan or in some cases, we can actually suspend a payment until the money comes in. However, in all of those cases, you need to communicate with us as soon as possible.”

And if you are one of the more than 30,000 Georgians due a refund from 2009, you have until midnight Monday to file a return.

For more information on tax-related issues, you can contact the IRS toll-free at 1-800-829-1040 or go online to www.irs.gov.