Presentation is loading. Please wait.

Presentation is loading. Please wait.

©2003 South-Western College Publishing, Cincinnati, Ohio Chapter 12 Tax Administration and Tax Planning Tax Administration and Tax Planning.

Similar presentations


Presentation on theme: "©2003 South-Western College Publishing, Cincinnati, Ohio Chapter 12 Tax Administration and Tax Planning Tax Administration and Tax Planning."— Presentation transcript:

1 ©2003 South-Western College Publishing, Cincinnati, Ohio Chapter 12 Tax Administration and Tax Planning Tax Administration and Tax Planning

2 © 2003 South-Western College PublishingTransparency 12-2 Objective Be familiar with the organizational structure of the Internal Revenue Service

3 © 2003 South-Western College PublishingTransparency 12-3 Organization of IRS rCongress creates tax law and the IRS enforces it

4 © 2003 South-Western College PublishingTransparency 12-4 Organization of IRS rHeadquartered in Washington DC rRegional Commissioners oversee four regional offices in Atlanta, Dallas, New York and San Francisco rDistrict offices are located throughout US and report to their respective regional offices rTen service centers are responsible for processing information

5 © 2003 South-Western College PublishingTransparency 12-5 IRS Restructuring Act of 1998 rDue to persistent problems with taxpayer service, this act sought to structurally & operationally change the IRS (thereby making it more accountable to the taxpayer)

6 © 2003 South-Western College PublishingTransparency 12-6 Objective Have a general understanding of the IRS audit process

7 © 2003 South-Western College PublishingTransparency 12-7 IRS Audits rIRS has right to examine taxpayers’ accounting records in a process called an audit

8 © 2003 South-Western College PublishingTransparency 12-8 Audit Appeals rThere are three possible results from an audit

9 © 2003 South-Western College PublishingTransparency 12-9 Objective Know the common penalties for taxpayers and tax preparers and be able to calculate them

10 © 2003 South-Western College PublishingTransparency Interest rInterest is charged to taxpayer for late taxes (for example, prior year audit reveals tax due) rInterest is paid to the taxpayer for refund (prior year audit reveals refund due) rInterest received from IRS is income; interest paid to IRS by taxpayers is nondeductible consumer interest rInterest rate is set at 3 points above the short term federal rate and is adjusted quarterly

11 © 2003 South-Western College PublishingTransparency Failure to File Penalties rIf a tax return is not filed by its due date (with extensions)

12 © 2003 South-Western College PublishingTransparency Other Penalties rFailure to Pay Penalty

13 © 2003 South-Western College PublishingTransparency Other Penalties (continued) rPenalty for failing to file informational returns on a timely basis (1099s, W-2s, etc) rPenalty for filing a frivolous tax return rPenalty for filing false withholding information rPenalty for writing a bad check for taxes rPenalty for underpaying estimated taxes

14 © 2003 South-Western College PublishingTransparency Objective Know the general rule for the statute of limitations on tax returns

15 © 2003 South-Western College PublishingTransparency Statute of Limitations rA taxpayer may not amend, nor may the IRS assess additional taxes, on a tax return for which the statute of limitations has expired

16 © 2003 South-Western College PublishingTransparency Tax Preparers rAny person compensated for preparing another person’s tax return is “paid tax return preparer” rOnly CPAs, attorneys or enrolled agents may represent clients at IRS proceedings rThere are a multitude of penalties if preparer does not conduct business with due diligence, sign returns, provide copy to clients, etc. rThe attorney-client privilege has been extended in limited circumstances to non-attorneys who are authorized to practice in front of the IRS (i.e., CPAs and enrolled agents)

17 © 2003 South-Western College PublishingTransparency Objective Be familiar with the process of filing tax returns electronically

18 © 2003 South-Western College PublishingTransparency e-Filing rElectronic filing is a process of transmitting tax returns by an ERO (electronic return originator) directly to IRS rForm 8453 (US Individual Income Tax Declaration for Electronic Filing), with original signatures and forms that cannot be electronically transmitted, must also be mailed rTax preparers may only transmit 5 returns without officially requesting approval to be part of electronic filing system via Form 8633

19 © 2003 South-Western College PublishingTransparency Refund Anticipation Loans rTaxpayer can arrange a refund anticipation loan (RAL) at many places that transmit electronic returns

20 © 2003 South-Western College PublishingTransparency Taxpayer Bill of Rights rDocument addresses taxpayers rights rRequires the IRS to inform taxpayers of their rights when dealing with the Service

21 © 2003 South-Western College PublishingTransparency Objective Know the basic concepts of tax planning

22 © 2003 South-Western College PublishingTransparency Tax Planning rAverage tax rate equals total tax paid divided by total income rMarginal tax rate is the tax rate on the “next” dollar of income

23 © 2003 South-Western College PublishingTransparency Tax Planning (continued) rTax evasion refers to the taxpayer avoiding tax in a manner that is illegal and can result in penalties and/or incarceration rGood planning helps the taxpayer avoid “tax traps”

24 © 2003 South-Western College PublishingTransparency Finished!


Download ppt "©2003 South-Western College Publishing, Cincinnati, Ohio Chapter 12 Tax Administration and Tax Planning Tax Administration and Tax Planning."

Similar presentations


Ads by Google