Above: U.S. Treasury Secretary Timothy Geithner, photo by Talk Media News Service.
Landlords under close watch by IRS
In December 2010, the U.S. Treasuring Inspector General for Tax Administration (TIGTA) recommended that the IRS handle tax returns with rental real estate activity in a new, more scrutinizing manner.
The recommendations were based on a 2008 Government Accountability Office study of 2001 returns which found that “at least” 53% of returns with rental real estate misreported their activity to the tune of a total $12.4 billion.
Recommendation of audits as a fundraiser?
TIGTA recommended that the percentage of audits made to real estate related tax returns increase, with emphasis on returns showing losses. This is part of the existing IRS Compliance Initiative Program but TIGTA urged the IRS to ramp up their handling of these returns.
The Treasury estimates that this increased scrutiny would generate $27.3 million in additional tax revenues over the next five years.
This week, the IRS has publicly disagreed with that number but has agreed to the increase in reviews for compliance sake.
The year of the audit
Regardless of the reasons, if you have investors as clients, especially anyone showing losses, they should be advised to make doubly sure they’ve got everything in line in case they are audited because it is likely this could be the era of the audits.
Thomas A B Johnson
April 13, 2011 at 11:50 am
Not to worry Turbo Tax Tim will allow Turbo Tax Forbearance, no doubt.
Lani Rosales
April 13, 2011 at 1:43 pm
haha good one!