The IRS can do more to stop erroneous refunds.  Treasury inspectors say.  The problem involves multiple returns that use the same tax ID number, such as divorced spouses each claiming a kid as a dependent or when different filers use the same child to obtain the earned income credit.  The Service’s computers reject e-filed returns in such cases, but many paper returns fall through the cracks.  In many cases, the IRS issues soft notices to get filers to fix their errors the next year.  But those notices don’t recover the revenue that is lost on current tax returns.

The Internal Revenue Service is starting to request and accept electronic tax records on audit.  Folks who use QuickBooks or Peachtree software can give agents a DVD, CD-ROM or flash drive.  Taxpayers needn’t print or sort documents stored electronically… saving time and effort in preparing for audits.  But be careful what you hand over.  Turning in all your records makes it easier for IRS to expand the scope of the exam.

Estimates for 2010
43.2%    Individual
40.5%    Social Wlefare Taxes
   7.2%   Corporate Income Taxes
   4.5%   Excise Taxes & Customs Duties
   4.6%   Other