IRS capital gains: they are watching you - By: Mark Jensen

The IRS capital gain collection has gone high tech. Most American knows that big brother is watching. But what most are unaware of is how in depth it has become with the age of the computer. Back in 2002 a company named Networth developed a software program that kept track of all the prices of stocks and bonds in all three major markets in America. This program is able to trace back 20 years.

Every so often like in 1988, the IRS goes through a major audit of American tax payers. That year they did a line by line audit of 50,000 returns. When it comes to capital gains there was no guess work. This software has proven to be capable of retrieving historical prices to determine cost basis of any major stock. This includes those that have been involved in mergers, spin offs or dividends that were reinvested.

With this new tool the IRS can sift through many more returns and eliminate those that paid the appropriate amount of tax. Those that decided to fudge the numbers, odds are starting to go in the IRS’s favor that they will catch you.

With more and more returns being filed electronically, computers are able to do more sniffing around with the numbers. This is fine with me because I have always been honest when filling my income tax return with the IRS. But there are still those out there that think it is a game and its worth playing by filing fraudulent numbers on their returns. More and more of them are getting caught.

I have never heard of anyone going to jail or prison yet but I know of one man that thought he was smart and then lost his house to the IRS. Do not play games with the IRS. Capital gains are taken very seriously and fraud will not be tolerated.

About the Author

It is important to seek professional advice when dealing with income tax rules and related items. Research on the computer is a great method for keeping your hourly attorney bills low, but always check your findings with a licensed attorney or accountant before making any financial or business decisions. If you need more information about big firms like H&R Block (commonly misspelled HNR Block) or other tax topics, visit us today at http://www.irs-help-tax.com.

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