Receiving a notice of audit from the Internal Revenue Service is something that many Georgia residents have worried about at one time or another. The penalties for concealing income or inflating expenses can be severe, but the IRS is generally given only three years to audit income tax returns. While this may come as a relief for those with anxieties about mistakes or omissions that they may have made long ago, there are a number of exceptions to the three-year rule.
Georgia residents who called the Internal Revenue Service with questions during the 2015 tax season will likely remember spending long periods on hold or being abruptly disconnected. Only 37 percent of the calls made to the IRS between Jan. 1 and April 18 of that year were put through to a customer service representative, and switchboards disconnected 8.8 million calls to prevent callers being left on hold for extremely long periods.
According to the annual report delivered by the National Taxpayer Advocate, the Internal Revenue Service's plans to go high-tech could reduce taxpayer rights and increase filing costs in Georgia and nationwide. The federal tax agency has spent millions of dollars to improve its online services since 2014.
Georgia residents may be interested to learn that House Republicans recently passed legislation that would greatly benefit charitable organizations. House Republican leaders have already been told by both Senate Democrats and the White House that they will help to pass the new laws.
Many Georgia residents actively trade stocks and other securities in order to increase the value of their personal investment portfolios. In some cases, people's efforts are hampered by the $3,000 deduction cap for capital losses that the IRS places on such activities.
The Foreign Account Tax Compliance Act may affect people in Georgia who have deposits in foreign financial institutions. Part of the HIRE Act of 2010, FATCA imposes penalties on FFIs if they fail to report information to the IRS about assets they are holding for U.S. taxpayers. The penalties that could be imposed under FATCA may be as high as 30 percent of the income an FFI earns from U.S. sources.
With the need to collect the so-called "Cadillac Tax" looming, the IRS is trying to determine the best way to do so. As a part of the Patient Protection and Affordable Care Act, the most generous employer provided health care plans are subject to a 40 percent excise tax. The 40 percent tax will be applied to group health insurance premiums that are greater than $10,200 for single person coverage and more than $27,500 for coverage for families starting in 2018.
The IRS reached a settlement with the estate of Bill Davidson, who died in 2009 as one of the country's wealthiest people. Georgia sports fans may have known Davidson as the owner of professional sports franchises in the NBA, WNBA and NHL. In 2013, Davidson's estate filed an action in U.S. Tax Court challenging IRS tax assessments amounting to $2 billion. Per the settlement agreement, the estate will pay the IRS $388 million.
Many Georgia residents may be able to significantly reduce their tax obligations by placing their money in retirement structures. In particular, traditional IRA plans are notable for their ability to provide their owners with financial leeway in addition to serving as nest eggs for later years.
Georgia taxpayers may know that the law generally gives the IRS three years to make an assessment or audit a tax return. There are exceptions to this rule, and the agency often shows relentless determination in their collection efforts even when the taxes in question are decades old. This was demonstrated in a 2013 Tax Court case when the IRS prevailed in court in a case involving payroll tax penalties incurred in 1982.