IRS finds underreporting of retirement income

TIGTA audit focuses on underreporting of retirement income [Audit Report No. 2012-30-011]:  Just small improvements in IRS’s examination of tax returns with retirement income could increase compliance and generate substantial revenue, the Treasury Inspector General for Tax Administration (TIGTA) said in an audit released on Feb. 7. According to the audit, for tax years 2008 and 2009, taxpayers filed some 21 million returns with taxable Individual Retirement Arrangement (IRA) income totaling $293 billion and 52.2 million returns with taxable pension income totaling $1 trillion. TIGTA found that IRS’s Automated Underreporter (AUR) Program is effectively determining the proper reporting on retirement income when Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., discloses the amount of the retirement distribution. In 2007, AUR Program examiners made tax assessments totaling $607 million on 217,800 tax returns, the audit found. “However, additional tax form information, if available, would improve compliance,” TIGTA said. The audit is available at http://www.treasury.gov/tigta/auditreports/2012reports/201230011fr.pdf

 

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