acct401db4 - earnings to pay less in tax Even under audit...

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RE: Grey areas in Income The grayest area that I find is Income. One could not claim all of his/her income on a tax return. There is income that does not have to be reported to the IRS. For instance, when one sells a car, when one works under the table, when works for money, but receives cash. Some of these are not reported to the IRS. So this income is not reported therefore, the IRS cannot tell if any one person is reporting all of his/her income. Many people will mow grass in the summer months or will clean houses to gain extra income. It will most likely not be reported as a service because most individuals require cash for these services. It is rare that one would include this income in the tax return. It could be to exclude this income intentionally or out of forgetfulness. Cash based businesses and employees may have a tendency to underreport
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Unformatted text preview: earnings to pay less in tax. Even under audit, the documentation for cash is much more evasive than that for those with proper bank statements. The enforcer is likely to use deductive reasoning to prove a case. With the tax gap at roughly $300 billion per year, this problem is not likely to go away. While the numbers of annual audits are on the rise, 100% compliance is not probable under our current tax scheme and enforcement procedures. Following this class it shows so many aspects of income that the normal tax payer is going to leave off because it would not come to mind to report as income. Most think of their job as their income, but to be completely honest it comes from every little increase of individual assets....
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