In a recent new plan implemented, the government is sending letters as reminders to various business organizations to update and report their all cash transactions. The IRS is aiming at more regular business information for every corporate house. It made a special mention of the purpose of sending such letters. IRS said that the letters are not for audit purpose. They are chiefly for acquiring tax information.
According to some experts, the fiscal move can create fear among the small business community. The approach also failed to create a positive impact on some business holders and legal advisors. Tom Reese, a small business entrepreneur complained in his interview to The Wall Street Journal that receiving letters straight from the IRS seems threatening. He added that he works hard to see to all accounts of his enterprise strictly in accordance to the rules and regulations of the IRS. A lawyer comments that the arrival of the reminder implies illegal activities. The letter to some is fraught with apprehension.
In a certain letter of remainder the header consisted of following words Notification of Possible Income Underreporting, asks the citizens to explain their behaviors related to misbalance between non-card payments and gross receipts. The business owner had to get a form and complete it when he receives the letter from IRS. He needs to clarify his standpoint about his gross receipts giving details as to why it is low as per the norms of IRS or why it is lower than the non-card payments.
IRS has posted the letters to only a very small fraction of company owners. The number could be estimated to around 20,000 of millions of business houses in the United States. The IRS has plans to extend this number and extend the program in the following months.
Representative who also chairs the House Small Business Committee, Sam Graves in a letter to the IRS said that the letter apart from generating fear in the hearts of the people also indicates that the recipient might be charged with extra fines and interest or be levied supplementary tax.
An accounting business owner in Westminster, Colo, told The Wall Street Journal that there are innumerable reasons as to why the record of even the most honest taxpayers would not live up to the rules of the organization. He cites a particular example, while selling a gift card; a company does not relate this to the sales account, however to the credit card companies it is shown as so.
The agency was under strict vigilance, when, it was reported that it was targeting only the conservative group for acquiring tax information, as the sought special reservation for tax exemption. IRS supported its own innovative measures saying that the new system is expected to lessen the burden of both the taxpayers and the tax professional. The effort and the implementation have to be diligent and secured to get the full benefit of the plan. The new program is aimed at minimizing the financial pressure and acquiring maximum transparency in taxation.