Tax collectors tighten screws as budget gaps widen - Boston Business Journal:

iwyqaxewun.wordpress.com
Their options are somewhat Thereare carrots, such as an amnesty progra m that the ran in March and April. By waivinfg penalties, the commonwealth hoped to collectg as muchas $20 million extrwa for fiscal 2009. And they have sticks. The departmeng now has the powedr tosuspend driver’s licenses and vehicles registrations for nonpayment of taxes. At the federal the is looking harder at offshore assetsand high-end tax In April the department’s Tax Division said it was litigatinyg about 90 civil tax shelter cases or groups of These efforts are kicking in at a time when treasuries are feeling a pinch.
For the first quarte of this year, the Massachusetts Department of Revenus collectednearly $1 billion less than in the same perioe last year, a drop of 6.8 percent. Salesx tax collections were down 5.1 percent, corporate and business tax collectionswere 16.1 percent off and incomre tax receipts fell by 6.1 percent. But the timinf is coincidental, the department said. “Making changes in tax administration is, not something that is accomplished overnight,” said DOR spokesma Robert Bliss. “You really have to plan out what you are Some changes, such as beefingb up the ranks of auditors, were authorized by the statse budget signed last summer.
And whild the department recently ordered Town Fair Tire Centerd to collect a 5 percent use tax on Massachusetts resident s buying tires in other that case dates back to a 2003 Taxaccountants don’t doubt the claimn on timing. Rather than a knee-jerk reaction to the more aggressive enforcement seems to bea long-term trend, they say. “They have programs where they are trying to increasr the amount of audits they are but that’s got nothing to do with the economy,” said Ken Kirklanc of LLC in Braintree.
However, both state and federao agencies are taking a moretargeted approach, said Gary managing director at in He and others say the IRS tendd to focus more now on specifics. In contacting a taxpayer, the agency will zoom in on the magnitudwof deductions, the size of a loss or other specififc matters, and then wrap it up quickly. At the statde level, resources shift with income Hayes said. Expect more audits of sales-and-usew taxes and more scrutiny of out-of-state filers. “Wwe are seeing a lot of notices, particularlhy if you are connectedx toa partnership. The states are getting more he said.
Nonprofits are under more scrutiny as Even the smallest nonprofitf must now file a Form990 disclosure, which demands more information on such topics as how the nonprofitt uses endowments, organizes its boarde and handles conflicts of interest. “Although therse is no law that says you must have these there is an opinion being presented as to the structurwe they should have and how the oversightf is set up to monitor how they servewtheir mission,” said John Sannella, an audit partner with Kirkland Albrecht & Fredrickson. “To the extent that you have no there is the potentiap that they could bered flags.
” There’s one more grouo on the hook more than ever before: accountants. “Thre preparer penalty rules are much more striccoming forward,” Kirkland said. That’x good news for taxpayers, as theier preparers have extra incentive to getit right.