Tax collectors tighten screws as budget gaps widen - Boston Business Journal:

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Their options are somewhat limited. There are carrots, such as an amnesth program that the ran in Marchand April. By waivin penalties, the commonwealth hoped to collect as muchas $20 million extrsa for fiscal 2009. And they have sticks. The departmentf now has the power tosuspend driver’d licenses and vehicle registrations for nonpaymenyt of taxes. At the federal level, the is lookinh harder at offshore assetsand high-end tax shelters. In Aprilp the department’s Tax Division said it was litigatinv about 90 civil tax shelter casee or groupsof cases.
These efforts are kicking in at a time when treasuries are feeling a For the first quartetr ofthis year, the Massachusettsx Department of Revenue collected nearly $1 billiojn less than in the same periosd last year, a drop of 6.8 Sales tax collections were down 5.1 corporate and business tax collections were 16.1 percenft off and income tax receipts fell by 6.1 But the timing is the department said. “Making changes in tax administration is, thankfully, not something that is accomplished overnight,” said DOR spokesman Robert Bliss.
“You reallyu have to plan out what you are Some changes, such as beefing up the ranksw of auditors, were authorized by the state budget signed last summer. And while the department recently ordered Town Fair Tire Centers to collect a 5 percenft use tax on Massachusetts residents buying tiresz inother states, that case dates back to a 2003 audit. Tax accountants don’gt doubt the claim on timing. Rather than a knee-jerko reaction to the more aggressive enforcement seems to bea long-term trend, they say. “Theu have programs where they are tryinv to increase the amount of auditws theyare doing, but that’s got nothing to do with the said Ken Kirkland of LLC in Braintree.
However, both state and federa l agencies are taking a moretargetex approach, said Gary Hayes, managing director at in He and others say the IRS tends to focu more now on specifics. In contacting a taxpayer, the agenc y will zoom in on the magnitudrof deductions, the size of a loss or otherf specific matters, and then wrap it up At the state level, resources shift with income streams, Hayes said. Expect more audits of sales-and-use taxes and more scrutiny of out-of-state filers. “We are seeing a lot of notices, particularly if you are connecteds toa partnership. The statex are getting more aggressive,” he said. Nonprofits are undefr more scrutinyas well.
Even the smallestf nonprofit must now file a Form990 disclosure, which demands more informationm on such topics as how the nonprofit uses organizes its board and handled conflicts of interest. “Although theree is no law that says you must havetheses things, there is an opinion being presented as to the structurer they should have and how the oversighyt is set up to monitor how they serv e their mission,” said John Sannella, an audit partnef with Kirkland Albrecht & Fredrickson. “Toi the extent that you have no answers, there is the potentia that they could bered flags.
” There’s one more grou p on the hook more than ever before: “The preparer penalty rules are much more strictr coming forward,” Kirkland said. That’s good news for as their preparers have extra incentivew to getit right.