Oh that is right, because they have no idea whether someone is working, until that person comes forth, to file for a form on income tax. Isn't it prepostrous how some people don't even bother to file for income taxes? The IRS has no way of knowing that people are earning money, and not even paying taxes. I think the law should be changed. What do you think on this issue? I can't help, but become angry just contemplating on this situation.
2007-12-16 15:26:32 · 7 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Only way they find out is if you are part of the 5% of the population which gets audited ever year.
2007-12-16 15:31:26 · answer #1 · answered by Anonymous · 0⤊ 0⤋
W-2s and 1099s are the most common way for the IRS to keep track. And every so often, the IRS decides to crack down on certain categories of taxpayers. Right now, they're focusing on the gap between income received by small businesses and that actually reported--among other things. It sometimes takes a while, but hopefully cheaters ultimately get caught and pay penalties for noncompliance. It's unfair to hard-working Americans who pay what they owe to have to carry the fiscal burden of nonfilers.
Unfortunately, what sometimes happens is the IRS allows an offer in compromise, an agreement with a recalcitrant taxpayer to pay less than what they owe on back taxes. They've tighened the standards to do this, but I guess the rationale is that half a loaf is better than none. It's unfair, though, and I don't blame you for being angry.
2007-12-17 08:14:09 · answer #2 · answered by LEW 3 · 0⤊ 0⤋
Get a clue. The IRS does know about the vast majority if income. What do you think W-2s and 1099s are for? Even if a taxpayer has cash income under the table, there's a good likelihood that an audit of another taxpayer will reveal that income stream so sooner or later most cheats get caught.
2007-12-16 15:33:58 · answer #3 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Many are caught by the fact that information returns are filed. Other ways are one taxpayer's return is audited and noncompliance by people the audited person does business with is uncovered. IRS can't get everybody. I have had more than one client who failed to file returns for many years.
2007-12-16 16:01:37 · answer #4 · answered by Anonymous · 1⤊ 0⤋
The IRS has a number of ways of determining who has not paid their taxes. Just think about the number of times you have given your SS# to a lender, car dealer or your own bank (if you have one). Sure you can fly under the radar for awhile but it is not very pleasant when you get caught.
2007-12-16 15:37:32 · answer #5 · answered by ? 6 · 1⤊ 0⤋
Your W-2 or form 1099 will get you caught. Employers send this to the IRS to get their business deductions. This will catch up to you and you can end up owing a lot of money fast.
2007-12-16 15:38:08 · answer #6 · answered by darhylp 1 · 1⤊ 0⤋
You forgot something. Employers report the taxes that they withhold from their employers. Employers report with a 1099 the amount paid to employee's that they didn't withhold taxes from.
It may take years, but they will eventually find the person who doesn't pay their taxes.
2007-12-16 15:36:22 · answer #7 · answered by New England Babe 7 · 1⤊ 0⤋