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Jewish World Review Jan. 30, 2001 / 7 Shevat, 5761
Tax Tales by A. J. Cook
http://www.jewishworldreview.com -- THE INTERNAL REVENUE SERVICE is playing a new match game with its form K-1 that it hopes will net billions in tax dollars. For some people, K-1 means kindergarten through first grade. To other people, the term means an IRS form taxpayers receive reporting income from trusts, estates, partnerships and certain companies called S corporations. These are conduit entities where some of or all their income is taxed to owners or beneficiaries. The IRS will now start comparing amounts on this form to what owners and beneficiaries show on their income tax returns. If the amounts don't match, they will get a letter from the IRS or, in complex situations, an audit. The form serves the same purpose as Form 1099s and W-2s most taxpayers receive. Even though the K-1 represents more money per form and fewer forms, the IRS has not up to this point matched them but has matched 1099s and W-2s. It receives 28 million K-1s and 1.2 billion 1099s and W-2s. Why hasn't it compared the K-1's before now? Too much trouble. These are matched manually, whereas most forms received by ordinary folk, 1099s and W2s, are matched electronically. The new program will find taxpayers who are not reporting this income and taxpayers using multiple-tier organizations to hide bogus tax shelters. This new match game could mean big tax bucks starting in 2001.
The moral: A match made in
01/22/00: Getting the address right
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