Internal Revenue Service will pre-screening all potential Non-filers Badges of Fraud
1.
On the initial screening of a non-filer case, the IRS compliance employee must determine if the facts indicate potential fraud. Indicators of fraud to be considered. some of the Fraud indicators are as follows:
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History of non-filing or late filing and an apparent ability to pay;
This indicator of fraud is insufficient support for assertion of the FFTF penalty when not in combination with any of the other fraud indicators listed below.
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Repeated contacts by the Internal Revenue Service;
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Knowledge of the filing requirements such as advanced education (college), business (especially tax) experience, record of previous filing etc.);
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Failure to reveal or attempts to conceal assets;
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Age and occupation of the taxpayer;
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Substantial tax liability after withholding credits and estimated tax payments;
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Large number of cash transactions , payment of personal and business expenses in cash when cash payment is unusual and/or the cashing (as opposed to the deposit) of business receipts;
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Indications of significant income per Information Return Processing or Taxpayer Delinquency Investigation documents substantial interest and dividends earned, investments in IRA accounts, stock and bond transactions, high mortgage interest paid);
Consideration should be given to any allowable expenses the taxpayer may have to offset self-employment income.
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Refuses or is unable to explain the failure to file;
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Experience of the taxpayer in tax matters such as a law professor, financial sector experience ,CPA or tax attorney; and,
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Prior history of criminal tax prosecutions for Title 26 violations.
2.
If indications of fraud exist, the IRS compliance employee will discuss the case with the group manager. If the group manager concurs that the possibility of fraud exists, the fraud technical advisor will be contacted. Whenever feasible, a meeting will be held between the compliance employee, group manager and FTA to discuss the need for fraud development.Thre individuals are usually involved in this process.
3.
If the possibility of fraud exists:IRS will not
1.
DO NOT SOLICIT tax returns. If returns are submitted, they should be accepted.
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DO NOT VOLUNTEER ADVICE to the taxpayer concerning any course of action he/she should follow.
3.
DO NOT DISCUSS tax liabilities, penalties, fraud, or criminal referral possibilities with the taxpayer.