With the expanding recession that we are not officially having according to the White House but is now being questioned by such luminaries as Congresswoman Maxine Waters and what the media and other government agencies claim we are not having officially either, the Internal Revenue Service has found another area that they will expand audit examinations to potentially increase revenues to the U.S. Treasury.
In a study by the GAO (Government Accounting Office) it has been determined that substantial tax revenues are not being correctly reported by those that have had mortgage debt forgiven based upon a new study provided by the GAO.
Preliminary IRS investigation of this arena of the failing economy suggests that in depth examinations, or audits could provide substantial new assessments and therefore potential cashflow for the government treasury on the backs of those already destitute.
IRS statistics indicate after reviewing available data an approximate $25 billion of forgiven debt was excluded from taxable income for those reporting forgiven debt just in 2008. The IRS estimates further suggest taxpayers excluded somewhere between $6.4 billion to $11.8 billion revenue to the U.S. Treasury.
IRS officials reported that it may be difficult to collect additional taxes on forgiven debts particularly when taxpayers are already insolvent and defaulting on debts, and that this and other considerations, such as the IRS's return on investment, would affect the IRS's decisions about allocating resources for enforcing this provision.
The GAO said there is evidence that some taxpayers have the ability to pay additional tax if owed, and certain housing market data show that the potential for significant noncompliance with the exclusion of forgiven mortgage debt exists.
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