IRS to audit Ferrari and Rolls Royce owners

Ferrari is a drug!

--Dan

 

You need to get that hollow vaccous baritone "U" sound in drugs: ala: druuuuugs

 

They can't even get a Tyco conviction! We're talkin' $300 million there!

I'm not losing any sleep on it.

Speedy"I paid taxes on ALL this art" 308

If they need any more of my money they'll have to talk to my lovely first wife.

 

Ma---

Get the 12 guage

Grandpa---

Get the UZI.

 

Why the concern of a tax return review?

Is your mistress' Porsche Cayenne included as an asset in your pharmaceutical business? (joke)

Who knows what the triggers are...maybe they choose every 100th tax form.

 

It is not an april Fools joke. I read it on the website of our local news station. What the gov't is going to do is use a new computer program that will be able to pick up small red flags such as vehicle registration and other things to balance against repoted income. It really won't affect most people, but those of us who have cash only type businesses may come into a few problems. We'll see what happens.

 

can you post the website?

 

This is the ny times article:

BOSTON (AP) -- Tax scofflaws, beware! A pack of digital bloodhounds may be on your trail. State revenue agencies across the nation are hunting for tax evaders with new high-tech tools: computer programs that mine an increasing number of databases for clues on the finances of people and businesses.

If your name is flagged, expect a letter or a call.

``It's the new trend. It's where everybody is headed,'' said Verenda Smith, government affairs associate at the Federation of Tax Administrators, which represents state tax agencies. ``The greatest value of these systems is in finding patterns that the human eye isn't that good at seeing.''

In Massachusetts, for example, the state tax agency can scan a U.S. Customs and Border Protection database of people who paid duties on big-ticket items entering the country -- so anyone who fails to pay the state the required 5 percent ``use tax'' gets flagged.

The state has also tried comparing motor vehicle registration data with tax returns, looking for people who might be driving Rolls Royces or Jaguars but declaring only a small income, Revenue Commissioner Alan LeBovidge said.

``They're able to drill or mine increasingly large amounts of information from various sources. Activities that would have previously taken them years of work can now be done within seconds,'' said Amar Gupta, co-director of the Productivity From Information Technology research center at MIT's Sloan School of Management. ``The dynamics have changed.''

The new tools have reaped hundreds of millions of dollars in increased tax collections, officials say. But the government's growing sophistication at collecting and scrutinizing data about taxpayers is sounding alarms among privacy advocates.

The Federation of Tax Administrators doesn't keep a definitive list of states using the technology, but Massachusetts, Texas, California, Washington, Virginia, Iowa and Florida are known to be leaders in the trend, which began in the late 1990s. The IRS is also using the techniques.

Revenue agency officials say the systems make them more efficient, with audits tending to yield more. They also say innocent people who shouldn't be audited at all are less likely to be bothered.

The tax agencies' ``data warehouses'' can stockpile data from state and federal agencies and, in some cases, private sources. And they are using new tools to analyze the data, including ``data-mining'' software that can scrutinize mountains of information to find patterns or establish relationships.

Tax officials say many of the databases they use have been available to them for years -- but it has never been so easy to integrate and analyze them.

That ease with which government can now measure up our lives troubles Chris Hoofnagle, associate director at the Electronic Privacy Information Center, a Washington-based privacy group.

He worries that the growing database culture in the United States ``can empower the state over individuals or increase the power of the state.''

``It can be used maliciously,'' said Hoofnagle.

Government data-mining sparked controversy last year, forcing a shutdown of the Pentagon's Total Information Awareness project to plumb public and private records for clues about terrorism. More recently, privacy concerns led several states to drop out of the Matrix crime database system.

The digital dossier-building among tax agencies doesn't just pinpoint which taxpayers should be audited. The analyzing systems can automatically generate letters to taxpayers and help locate people who have changed their addresses.

The Massachusetts system mixes databases from the IRS and Customs, along with state motor vehicle, incorporation and professional licensing records. The state tax agency says it uses other databases, but won't name them.

Officials in Massachusetts and several other states said, however, that their agencies did not buy information from the sometimes-controversial vendors that aggregate and sell vast amounts of personal data about individuals.

 

quote
"The state has also tried comparing motor vehicle registration data with tax returns, looking for people who might be driving Rolls Royces or Jaguars but declaring only a small income, Revenue Commissioner Alan LeBovidge said"

i wonder what they consider a small income for a 360 or 355 owner?

 

That's not the point. The IRS really does use certain indicators and possessions as audit flags. My tax law professor worked for the IRS in developing some of these systems. He was under a strict NDA though, and couldn't reveal what would trigger an audit. That isn't to say we didn't try and get info out of him.

 

...anyone claiming a F as a "business" expense...

 

Great. I have both.

 

Yes, I once asked my CPA about that one, and he fell out of his chair laughing.

 

You can do it. You'd better have clean books, but its doable.

 

..like many other things that just seem inherently wrong. Just because you CAN do something doesn't mean you SHOULD or be allowed to. Yes, Yes, they should change the tax laws if they don't want us to be able to [fill in the blank].... yada, yada, yada. Still, doesn't mean its right.

 

Why not? I mean, proper tax planning to mitigate taxes doesn't mean you're a tax cheat. It's one thing to lie and hide money, another just to structure it so that openly declared (and appropriately used) assets receive preferential treatment.

Now, I would advocate a law that requires signage on a business vehicle to ID it as such. Even still, in Boston I see a lot of cars with black lettering on a black car, on the rear fender.

 

Well, I'm screwed for sure. I own one of each.

 

I'm sure it is. I bet Preston Henn of the Swap Shop is writing his Enzo off as advertising expense. It has big letters on the windshield that say Swap Shop and it appeared in Motor Trend that way. It is featured prominently on the main page of the website as well. All things that indicate a business use for the car and justify calling it a business expense.

 

Well, if you haven't cheated on your taxes, then you shouldn't have much to worry about if you get audited. On the other hand, if you have done a little bit of stretching of expenses on your schedule C and shrinking on the income side of schedule A, then you may want to consider refiling previous tax returns.

Pat, my wife, and I have been audited several times, and have never had to pay any more. It was all a big waste of time for the Infernal Revenue Service. Ha, ha, ha. At some point, if they keep trying, I'll have to pay. So far, so good.

Bob Wassam

 

I'd tell them mine are Fieros.

 

That's clever. If you had a nice race livery style ad it could be very cool.

 

I wouldn't want to go through an audit without a CPA. That's expensive per hour, and the money it costs you is something you won't ever get back.

 

If this is true, I think the IRS would wonder why I'm only driving the Ferraris that I have...

 

Did you cheat on your taxes? If the answer is no, you have nothing to worry about.

You are allowed to inherit $700,000 per person without any tax liability, I am sure several people have used $45,000 of their new found money to buy a 328.

I've been audited, have your attorney and accountant there, say nothing until you confer with your people on every single question. The IRS has to make their case against you, you do not have to help them by running your mouth. Ideally the IRS wants to scare you, they will offer you a deal at the end. Whether you owe or do not owe $8,000, they will offer to go away for such a figure, most people with net worths over $500,000 take the deal for no other reason than to end the stress. The stress IMO is on them to make their case, not on you to prove you are innocent. If they had you dead to rights you would have been arrested, an audit is their way of getting you to talk yourself into an arrest. You answers should always be "I'm not sure", give yourself wiggle room so you cannot be accused of lying, "not sure" does not tie you down like a yes or a no response.

 

State registration info is readily available from at least two sources, R. L. Polk and Experian. I lost touch with this stuff a long time ago, but I believe there is also a national data base that has been in operation for five years or so.