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The IRS could be classified as one of the most
powerful organizations in the U.S. Considering that that the IRS is solely
responsible for collecting Federal taxes and imposing penalties for late,
understated, or evasive filings, the IRS poses one of the largest financial
threats to many individuals and business owners. To sum it up, the IRS has
unique information resources, legal standing, and roles as a law enforcement
agency. On top of that, the IRS also acts as a legislative-originating
authority with a large amount of freedom to make mistakes with out
consequences (no one can penalize the IRS for incorrect tax accusations).
So what can we do to minimize the IRS’s over-inflated
accumulation of power and protect ourselves from its potential for financial
wrath? Unfortunately, if there were a concrete answer for that, the IRS
wouldn’t be the intimidating and widely feared agency it is today.
Since the IRS uses what filers provide (along with
other miscellaneous resources) to help determine the accuracy of accused
filings, our defense is greatly reduced. That’s the IRS’s whole idea! There
is one thing we can do, each day, to better prepare ourselves for possible
tax evasion accusations…keep records.
Quite possibly, our best defense against audits and
false evasion accusations is to keep accurate, detailed records of cash
flow, payments, earnings and other financial motions. Depending on your
profession and your position within it, your specific approach could
be extensive and time consuming.
A meeting with your financial advisor or accountant is
a great place to start to find advice on what financial records and
statements are the best to focus on to keep up your guard. Generally
speaking, the greater volume of records you keep (and their accuracy), the
better your chances are for surviving an all-out IRS battle.
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