Accounting Today - November 15, 2010

The IRS plans to take a closer look at businesses that fail to file tax re turns, and identify more of them.

The agency cannot develop a comprehensive estimate of the number of businesses that do not file returns because it lacks data about the population of all busi nesses, but it could use the inven tory of business nonfilers it already has on hand to determine noncom pliance, according to a new report by the Government Accountability Office, which noted that the IRS identifies several million potential business nonfilers each year, more than it can thoroughly investigate.

Until recently the IRS has not had a way to prioritize the cases in its large inventory. But the IRS modern ized its business nonfiler program last year by incorporating income and other data in its records indi cating business activity. The IRS’s Business Master File Case Creation Nonfiler Identification Process, or BMF CCNIP, now assigns each case a code based on this data. The IRS uses the code to select the cases to work, with the goal of securing re turns from nonfilers.

The GAO identified several op portunities to enhance the IRS’s identification and pursuit of non filers. For example, the new selec tion codes provide a quick way to verify taxpayer statements that a business has ceased operations and

IRS aims at non-filing businesses WaShIngton, D.C.

does not need to file a return. IRS
Collections staff have been instruct
ed to use the codes when making
case closure decisions. They were
previously instructed to use other
income data, but the GAO’s analy
sis indicated that this may not have
been done in all cases.

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to Schedule UTP in response to tax
payer comments, more than most
commentators had expected. The
burden of the new requirements
have been significantly lessened
and/or postponed. The IRS has
probably also helped itself with the
changes by avoiding the risk of be
ing overwhelmed with lengthy dis
closures that could swamp its per
sonnel and systems. We are likely to
see continued modifications of the
requirements in future years as the
IRS evaluates the submissions that
it receives for 2010. AT
Strategy
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