Tag: IRS

The IRS Decided to Get Tough Against Microsoft. Microsoft Got Tougher

Seth Anderson0 comment

Darth Vader

 

ProPublica reports:

Eight years ago, the IRS, tired of seeing the country’s largest corporations fearlessly stash billions in tax havens, decided to take a stand. The agency challenged what it saw as an epic case of tax dodging by one of the largest companies in the world, Microsoft. It was the biggest audit by dollar amount in the history of the agency.

Microsoft had shifted at least $39 billion in U.S. profits to Puerto Rico, where the company’s tax consultants, KPMG, had persuaded the territory’s government to give Microsoft a tax rate of nearly 0%. Microsoft had justified this transfer with a ludicrous-sounding deal: It had sold its most valuable possession — its intellectual property — to an 85-person factory it owned in a small Puerto Rican city.

…Meanwhile, the numbers Microsoft had used to craft its deal were laughable, the agency concluded. In one instance, Microsoft had told investors its revenues would grow 10% to 12% but told the IRS the figure was 4%. In another, the IRS found Microsoft had understated revenues by $15 billion.

Determined to seize every advantage against a giant foe, the small team at the helm of the audit decided to be aggressive. It used special powers that the agency had shied away from using in the past. It took unprecedented steps like hiring an elite law firm to join the government’s side.

To Microsoft and its corporate allies, the nature of the audit posed a dire threat. This was not the IRS they knew. This was an agency suddenly committed to fighting and winning. If the aggression went unchecked, it would only encourage the IRS to try these tactics on other corporations.

“Most people, the 99%, they’re afraid of the IRS,” said an attorney who works on large corporate audits. “The other 1%, they’re not afraid. They make the IRS afraid of them.”

Microsoft fought back with every tool it could muster. Business organizations, ranging from the U.S. Chamber of Commerce to tech trade groups, rallied, hiring attorneys to jump into the fray on Microsoft’s side in court and making their case to IRS leadership and lawmakers on Capitol Hill. Soon, members of Congress, both Republicans and Democrats, were decrying the IRS’ tactics and introducing legislation to stop the IRS from ever taking similar steps again.

The outcome of the audit remains to be seen — the Microsoft case grinds on — but the blowback was effective. Last year, the company’s allies succeeded in changing the law, removing or limiting tools the IRS team had used against the company. The IRS, meanwhile, has become notably less bold. Drained of resources by years of punishing budget cuts, the agency has largely retreated from challenging the largest corporations. The IRS declined to comment for this article.

Recent years have been a golden age for corporate tax avoidance, with massive companies awash in profits routinely paying tax rates in the single digits, or even nothing at all. But how corporations manage to do this and keep the IRS at bay is mostly shrouded in secrecy

(click here to continue reading The IRS Decided to Get Tough Against Microsoft. Microsoft Got Tougher. — ProPublica.)

Truly despicable, on many levels. Microsoft is not teetering on the edge of financial collapse, they can afford to pay their fair share of taxes. Shameful that both political parties enable this abuse, and respond by defunding/defanging the IRS from doing its job. Meanwhile, the US debt grows by leaps and bounds, and corporate profits too.

Going Clear and the Ridiculousness of Tax Exemption for Religious Organizations

Seth Anderson0 comment

Ideas and Not Battles…
Ideas and Not Battles…

I hope you’ve seen, or plan to see, the documentary by Alex Gibney called Going Clear: Scientology and the Prison of Belief. Besides the whole insanity of Xenu, and thetans and Suppressive Persons, a big question raised is why exactly did the IRS classify L. Ron Hubbard’s science fiction stories as a religion, entitled to evade taxes? Was it a result of Operation Snow White? Or some other reason?

The latter half of Going Clear delineates how David Miscavige uses the above dogma to create a financial empire built on celebrity outreach, with the organization’s Celebrity Centre being a major landmark, and Hubbard’s directive of “fair game” (i.e., harassment and threats to enemies labeled “suppressive persons”). The result is extensive research and testimony based on the experiences of former church members, some of them former senior members, with allegations of torture, labor camps, re-education camps, human trafficking, and a non-profit religion that has at least $1.5 billion in the bank. If you or I paid someone who worked for us 40 cents an hour or forced someone to mop a bathroom with their tongue, we would probably be looking at spending some time in a courtroom.

However, because Scientology has tax-exempt status as a religion, these practices are protected by the First Amendment as “self-inflicted” punishments by adherents of a religion.

That tax-exempt status was also important in saving Scientology from bankruptcy. Going Clear asserts the church was looking at a $1 billion tax bill in 1993 after fighting the IRS for decades. Not only was the tax debt forgiven, but the classification of Scientology as a religion also means sales of Dianetics and other Hubbard books are not taxed either, since they’re considered “religious texts.” And all of this is supposed to be given a happy face by trotting out celebrities like Tom Cruise, John Travolta, and others so they can peddle Scientology in other countries and attempt religious recognition in Europe and elsewhere. However, Cruise is shown to be the equivalent of manipulated royalty within the church. Church insiders paint a picture of him as pampered and coddled to be Scientology’s ambassador to the world, with his every whim attended to, but Miscavige dictates who can be close to Cruise and is jealously protective of his own relationship with the star. And Travolta is implied to be either indifferent to the religion’s abuses or a “captive” who stays in his place because of the threat of blackmail.

(click here to continue reading ‘Going Clear’ offers a devastating exposé of greed and abuse.)

Truthfully, I don’t understand why any mega-rich church gets to be tax exempt. My taxes partially go to support schools, I don’t object to that despite me having no children of my own. I understand the idea of the public good – a well educated society is better for all of us. I pay for the park district, and I don’t object to that. I use the parks, I am happy to see others using the parks, families, dogs, whatever. But what good to society is Scientology doing? or any of us who aren’t Tom Cruise or John Travolta?

I don’t think the Catholic Church should be tax-exempt either, but at least they seem to do a small amount of good for the public – soup kitchens, outreach, etc. What is Scientology doing for the community? Other than separating rubes from their money? 

The Nonprofit Risk Management Center reports that more than 100 501(c)(3) organizations are stripped of their tax-exempt status each year. The reasons can vary, covering the violation of laws that govern private benefits, lobbying, political campaign activity, unrelated business income, the obligation to report annually and maintaining operation in accord with stated exempt purpose.…

According to the film, Church of Scientology Chairman David Miscavige ordered the organization’s members to file individual lawsuits against the IRS for its failure to recognize it as a church. Overwhelmed by 2,400 individual suits and the prospect of defending itself against all of them, the IRS agreed to grant Scientology tax-exempt status in exchange for the withdrawal of the cases.

A 2011 tax filing reveals that the three organizations comprising Scientology claim a combined value of $1.5 billion, a sum that has allegedly been built on the backs of members who pay thousands of dollars to rise within the organization, are paid 40 cents an hour for labor and have been tortured for dissent, combined with the organization’s vast international property portfolio. “This issue is not about whether Scientology is a religion,” Gibney told TheWrap. “The issue is whether or not Scientology is pursuing policies that are not in the public interest.” The government simply needs to determine whether there’s a “fundamental overriding interest” in declassifying an organization involved in the above activities as exempt from taxation.

According to the IRS website, to be tax-exempt, an “organization’s purposes and activities may not be illegal or violate fundamental public policy.” An IRS representative told TheWrap he’s unable to comment on whether there’s currently an investigation into any organizations or individual cases.

(click here to continue reading HBO’s ‘Going Clear’ Triggers New Scrutiny of Scientology’s Tax-Exempt Status.)

Church of Scientology London
Church of Scientology London

So how exactly did the Scientologists get the IRS to reverse itself? There are many still unanswered questions:

For 25 years, I.R.S. agents had branded Scientology a commercial enterprise and refused to give it the tax exemption granted to churches. The refusals had been upheld in every court. But that night the crowd learned of an astonishing turnaround. The I.R.S. had granted tax exemptions to every Scientology entity in the United States.…The landmark reversal shocked tax experts and saved the church tens of millions of dollars in taxes. More significantly, the decision was an invaluable public relations tool in Scientology’s worldwide campaign for acceptance as a mainstream religion. On the basis of the I.R.S. ruling, the State Department formally criticized Germany for discriminating against Scientologists. The German Government regards the organization as a business, not a tax-exempt religion, the very position maintained for 25 years by the American Government.

The full story of the turnabout by the I.R.S. has remained hidden behind taxpayer privacy laws for nearly four years. But an examination by The New York Times found that the exemption followed a series of unusual internal I.R.S. actions that came after an extraordinary campaign orchestrated by Scientology against the agency and people who work there. Among the findings of the review by The Times, based on more than 30 interviews and thousands of pages of public and internal church records, were these:

*Scientology’s lawyers hired private investigators to dig into the private lives of I.R.S. officials and to conduct surveillance operations to uncover potential vulnerabilities, according to interviews and documents. One investigator said he had interviewed tenants in buildings owned by three I.R.S. officials, looking for housing code violations. He also said he had taken documents from an I.R.S. conference and sent them to church officials and created a phony news bureau in Washington to gather information on church critics. The church also financed an organization of I.R.S. whistle-blowers that attacked the agency publicly.

*The decision to negotiate with the church came after Fred T. Goldberg Jr., the Commissioner of the Internal Revenue Service at the time, had an unusual meeting with Mr. Miscavige in 1991. Scientology’s own version of what occurred offers a remarkable account of how the church leader walked into I.R.S. headquarters without an appointment and got in to see Mr. Goldberg, the nation’s top tax official. Mr. Miscavige offered to call a halt to Scientology’s suits against the I.R.S. in exchange for tax exemptions.

After that meeting, Mr. Goldberg created a special committee to negotiate a settlement with Scientology outside normal agency procedures. When the committee determined that all Scientology entities should be exempt from taxes, I.R.S. tax analysts were ordered to ignore the substantive issues in reviewing the decision, according to I.R.S. memorandums and court files.

The I.R.S. refused to disclose any terms of the agreement, including whether the church was required to pay back taxes, contending that it was confidential taxpayer information. The agency has maintained that position in a lengthy court fight, and in rejecting a request for access by The Times under the Freedom of Information Act. But the position is in stark contrast to the agency’s handling of some other church organizations. Both the Jimmy Swaggart Ministries and an affiliate of the Rev. Jerry Falwell were required by the I.R.S. to disclose that they had paid back taxes in settling disputes in recent years.

(click here to continue reading Scientology’s Puzzling Journey From Tax Rebel to Tax Exempt – NYTimes.com.)

Xenu dot Net
Xenu dot Net

From the IRS manual, your organization only needs to check these boxes off to be classified as a religion, and not even check all the boxes:

The Service considers all the facts and circumstances in determining whether an organization is a church, including whether the organization has the following characteristics:

  • a distinct legal existence
  • a recognized creed and form of worship
  • a definite and distinct ecclesiastical government
  • a formal code of doctrine and discipline
  • a distinct religious history
  • a membership not associated with any other church or denomination
  • a complete organization of ordained ministers ministering to their congregations
  • ordained ministers selected after completing prescribed courses of study
  • a literature of its own
  • established places of worship
  • regular congregations
  • regular religious services
  • Sunday schools for religious instruction of the young
  • schools for the preparation of its ministers

The above list of 14 church characteristics (first published by the Service in 1978 as a news release, IR–1930) is not exclusive—any other facts and circumstances that may bear upon the organization’s claim for church status must also be considered.

An organization need not have all of the characteristics (few churches do, and newly-created churches cannot be expected to); thus, no single characteristic is controlling.

Some of the characteristics may be given more weight than others in a given case.

(click here to continue reading Internal Revenue Manual – 7.26.2 Private Foundations Defined – IRC 509(a)(1) Exlcusions (Other Than IRC 170(b)(1)(A)(vi)) and IRC 509(a)(4) Exclusion.)

Church of Scientology
Church of Scientology

Patriotism and Taxes: Walgreens Considering Fleeing US

Seth Anderson0 comment

Walgreens Coming Soon

Walgreen Co. is allegedly considering relocating its headquarters from Deerfield, IL to somewhere in Europe, probably Switzerland, perhaps Paris to avoid contributing extra dimes to our national good. Shareholders are more important than schools and roads, never forget.

In a twist on economic globalization less obvious than moving factories overseas, a small but growing number of corporations have relocated headquarters to Europe to escape the 35 percent tax on U.S. profits, the highest in the developing world.

…

Walgreen Co., the nation’s largest drugstore chain, is under pressure from some shareholders to move its headquarters to Europe, where it owns nearly half of Swiss-based pharmacy giant Alliance Boots.

Deerfield-based Walgreen has called Illinois home for all its 113 years.

Though a move would make financial sense for Walgreen and its investors, it’s an executive decision fraught with political risk for a company as high profile as the pharmacy chain, analysts said Monday after news leaked that Walgreen and investors discussed the possibility.

Walgreen plays an integral role in the U.S. health care system, dispensing drugs to millions of consumers through its more than 8,000 stores. A significant portion of its $72 billion in annual sales comes from Medicare, the federal government’s insurance program for the elderly.

 

(click here to continue reading Investor group pressures Walgreens to move HQ to Europe – Chicago Tribune.)

Tax Refund Received
Tax Refund Received

Not mentioned in this Chicago Tribune (Republican) article is that most U.S. corporations pay much, much less than the 35% corporate tax rate often cited. Loopholes, deductions add up to reduce corporate taxes in a way that an individual tax filer can never hope to replicate.

The biggest, most profitable American companies paid only a fraction of the taxes they would owe under the official corporate rate, according to a study released on Monday by the Government Accountability Office.

Using allowed deductions and legal loopholes, large corporations enjoyed a 12.6 percent tax rate far below the 35 percent tax that is the statutory rate imposed by the federal government on corporate profits.

…

The report found that even when foreign, state, and local taxes were included, the tax rate of large companies rose only to 16.9 percent of total income, still well below the official 35 percent.

“Some U.S. multinational corporations like to complain about the U.S. 35 percent statutory tax rate, but what they don’t like to admit is that hardly any of them pay anything close to it,” Mr. Levin said in a statement. “The big gap between the U.S. statutory tax rate and what large, profitable U.S. corporations actually pay is due in large part to the unjustified loopholes and gimmicks that riddle our tax code.”

(click here to continue reading Big Companies Paid a Fraction of Corporate Tax Rate – NYTimes.com.)

Three Thousand Walgreens
Three Thousand Walgreens

Now, if Walgreen Co. pays 35% in tax, and the rest of their competitors pay only 12.6% or similar, than perhaps Walgreen’s should hire a few accountants before moving their entire operations to socialist1 Europe. I’d hazard a guess that Walgreen’s has as good of accountants and tax lawyers as any other U.S. corporation, and thus is not paying 35% of its income in tax. 

Also, I don’t see how Walgreen Co. could depend upon maintaining its Medicare cash-cow if it was a non-US corporation. That would not play well during election season.

Footnotes:
  1. kidding, kidding, of course [↩]

Photo Republished at IRS Pays Billions In Bogus Refunds—But Legit Refunds Still Get Audited – Forbes

eggplant0 comment

Tax Refund Received

My photo was used to illustrate this post

The IRS has had a string of recent failures, but paying out bogus refunds is particularly embarrassing. The IRS knows it is happening, knows which tax credits and refunds are targeted, and still can’t seem to stop it. President Obama even called for a fix back in 2009 in an executive order. The IRS is looking into it. And a new report says there’s no solution in sight. The IRS paid out $132 billion in bogus tax credits over the last decade. The Treasury Inspector General for Tax Administration reports that the IRS is not in compliance with Executive Order 13520 to reduce improper payments. The IRS has had several warnings.…Tax Refund Received (Photo credit: swanksalot)

click here to keep reading :
IRS Pays Billions In Bogus Refunds—But Legit Refunds Still Get Audited – Forbes

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Darrell Issa saved by the news cycle

Seth Anderson0 comment

Master and Servant
Master and Servant

Remember how this faux controversy unfolded next time Darrell Issa is talking. He is not an honest man, nor should he be trusted.

In particular, the controversy over IRS scrutiny of Tea Party groups has largely disappeared from the headlines. Considering how much of a political gift that particular controversy was to Republicans, you’d expect them to be upset about this fact. But recent revelations have actually given them cause to celebrate the nation’s short attention span.

It was revealed this week, in fact, that the entire scandal was essentially a set-up. First, acting IRS commissioner Danny Werfel testified that the IRS also scrutinized and challenged groups with names that included “Occupy” and “progressive.” IRS documents released by House Democrats supported his testimony. The IG didn’t uncover targeting of liberal groups because it wasn’t asked to.

The spokesman for the Treasury inspector general noted their audit acknowledged there were other watch lists. But the spokesman added: “We did not review the use, disposition, purpose or content of the other BOLOs. That was outside the scope of our audit.”

We then learned that the entire reason the Treasury Inspector General highlighted IRS scrutiny of conservative groups, but not liberal groups, was because the IG had been instructed to do so by Issa.

(click here to continue reading Issa saved by the news cycle – Salon.com.)

See – no scandal, just partisan political bullshit to attempt to embarrass President Obama’s Administration. 

I think the bigger problem is actually the designation that allows political organizations to be tax-free at all. Why this loophole? Eliminate the 501(c )(4) category outright, because it is a joke. Corporations can funnel unlimited cash to these alleged social welfare organizations, untrammeled by disclosure; is that really good for the political process?

To be tax-exempt as a social welfare organization described in Internal Revenue Code (IRC) section 501(c)(4), an organization must not be organized for profit and must be operated exclusively to promote social welfare. Theearnings of a section 501(c)(4) organization may not inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any managers agreeing to the transaction. See Introduction to IRC 4958 for more information about this excise tax. For a more detailed discussion of the exemption requirements for section 501(c)(4) organizations, see IRC 501(c)(4) Organizations. For more information about applying for exemption, see Application for Recognition of Exemption.

To be operated exclusively to promote social welfare, an organization must operate primarily to further the common good and general welfare of the people of the community (such as by bringing about civic betterment and social improvements). For example, an organization that restricts the use of its facilities to employees of selected corporations and their guests is primarily benefiting a private group rather than the community and, therefore, does not qualify as a section 501(c)(4) organization. Similarly, an organization formed to represent member-tenants of an apartment complex does not qualify, because its activities benefit the member-tenants and not all tenants in the community, while an organization formed to promote the legal rights of all tenants in a particular community may qualify under section 501(c)(4) as a social welfare organization. An organization is not operated primarily for the promotion of social welfare if its primary activity is operating a social club for the benefit, pleasure or recreation of its members, or is carrying on a business with the general public in a manner similar to organizations operated for profit link].

Seeking legislation germane to the organization’s programs is a permissible means of attaining social welfare purposes. Thus, a section 501(c)(4) social welfare organization may further its exempt purposes through lobbying as its primary activity without jeopardizing its exempt status. An organization that has lost its section 501(c)(3) status due to substantial attempts to influence legislation may not thereafter qualify as a section 501(c)(4) organization. In addition, a section 501(c)(4) organization that engages in lobbying may be required to either provide notice to its members regarding the percentage of dues paid that are applicable to lobbying activities or pay a proxy tax. For more information, see Lobbying Issues .

The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity. However, any expenditure it makes for political activities may be subject to tax under section 527(f). For further information regarding political and lobbying activities of section 501(c) organizations, see Election Year Issues, Political Campaign and Lobbying Activities of IRC 501(c)(4), (c)(5), and (c)(6) Organizations, and Revenue Ruling 2004-6.

Identity Theft and Your Tax Return

Seth Anderson2 Comments

 Darth Vader

Darth Vader

Scary stuff, actually. A million phony tax returns being filed annually seems to me to be a bigger threat to our nation financial security than kissing Grover Norquist’s, uh, ring.Too bad the Republican Do Nothings in Congress have partisanship on their mind, party over country… 

Besieged by identity theft, Florida now faces a fast-spreading form of fraud so simple and lucrative that some violent criminals have traded their guns for laptops. And the target is the United States Treasury. With nothing more than ledgers of stolen identity information — Social Security numbers and their corresponding names and birth dates — criminals have electronically filed thousands of false tax returns with made-up incomes and withholding information and have received hundreds of millions of dollars in wrongful refunds, law enforcement officials say.

The criminals, some of them former drug dealers, outwit the Internal Revenue Service by filing a return before the legitimate taxpayer files. Then the criminals receive the refund, sometimes by check but more often though a convenient but hard-to-trace prepaid debit card.

The government-approved cards, intended to help people who have no bank accounts, are widely available in many places, including tax preparation companies. Some of them are mailed, and the swindlers often provide addresses for vacant houses, even buying mailboxes for them, and then collect the refunds there.

Postal workers have been harassed, robbed and, in one case, murdered as they have made their rounds with mail trucks full of debit cards and master keys to mailboxes.

The fraud, which has spread around the country, is costing taxpayers hundreds of millions of dollars annually, federal and state officials say. The I.R.S. sometimes, in effect, pays two refunds instead of one: first to the criminal who gets a claim approved, and then a second to the legitimate taxpayer, who might have to wait as long as a year while the agency verifies the second claim.

J. Russell George, the Treasury inspector general for tax administration, testified before Congress this month that the I.R.S. detected 940,000 fake returns for 2010 in which identity thieves would have received $6.5 billion in refunds. But Mr. George said the agency missed an additional 1.5 million returns with possibly fraudulent refunds worth more than $5.2 billion.

…

Career criminals know easy money when they see it. The police say they run across street corner drug dealers and robbers who have been in and out of prison for years now making lots of money by filing fraudulent returns. Some have been spotted driving Bentleys and Lamborghinis.

“A gentleman, a former armed robber, said: ‘I’m not doing robberies anymore. This is much cleaner. I don’t even have to use a gun,’ ” said Sgt. Jay J. Leiner of the economic crimes unit in the Broward Sheriff’s Office, which has formed a multiagency task force.

Mr. Ferrer, the United States attorney, said he had seen tax fraud overtake violent crime in Overtown, a poor, high-crime section of Miami. He said criminals there were holding filing parties, at which they would haul out laptops and, for a fee, teach others how to run the swindle.

“There is no real competition,” Mr. Ferrer said. “They are not fighting each other. Altogether, they are stealing from the I.R.S.”

(click here to continue reading With Personal Data in Hand, Thieves File Early and Often – NYTimes.com.)

IRS May Make Political Groups Pay Dearly for Keeping Donors Secret

Seth Anderson0 comment

Get What You Deserve
Get What You Deserve

Wow! That would be great news. Not Thelonious Monk dancing (YouTube) great, but close…

For years, the IRS has done little or nothing to check the rise of overtly political groups that claim a special tax-exempt status in order to funnel secret money into election-related advertising.

But in a sign that the agency may be waking from its slumber, the IRS has sent detailed questionnaires to several Tea Party organizations — and possibly other political groups — to determine if they truly qualify for the 501(c)(4) designation intended for groups whose exclusive purpose is to promote social welfare.

Should any group currently calling itself a 501(c)(4) have its designation denied or revoked, tax experts said the consequences could be severe, including fines of 35 percent or more of the money they raised in secret.

And the groups might have to make donors’ names public.

…

The tax code requires 501(c)(4) groups to be operated “exclusively” for social welfare purposes — which does not include intervention in political campaigns. The IRS has allowed the groups to engage in political activity as long as it was not their primary purpose. But for many of these groups, it’s hard to see what other purpose they could possibly have. It’s also hard to see why a political group would file under section 501(c)(4) instead of under Section 527 — the part of the tax code explicitly designed for political groups including PACs and super PACs — other than to hide its donors. Like the C4s, the 527 groups are allowed to raise unlimited funds and pay no taxes. They just have to disclose who donates money.

Reform groups have been pressuring the IRS to enforce its rules for months. In February, a group of Democratic senators sent a letter to the IRS, which stated: “It is contrary to the letter and spirit of the statute for political organizations formed primarily to advocate for a political candidate or to run attack ads against other candidates to take advantage of section 501(c)(4).”

(click here to continue reading IRS May Make Political Groups Pay Dearly for Keeping Donors Secret — And Out Them.)

That is exactly why – hiding their donors from public scrutiny. The IRS shouldn’t drag their feet, but do this now, before the 2012 election…

 

Keep Your Financial Records No Longer Than You Must

Seth Anderson0 comment

Easier said than done, we are buried in mounds of paper from years past. Shredding documents takes effort, and time, and it is usually easier to box papers up, and stash them somewhere. Still, there is compelling reasons to act, and clean up.

Darth Vader

According to Catherine M. Williams, vice president for financial literacy at the credit counseling firm Money Management International, there are two main reasons to keep financial records. “It’s either for backup to a tax issue or for proof that you did something like make a payment,” Ms. Williams said.

The Internal Revenue Service requires that individuals be able to produce records proving any income, deductions or credit claimed for at least three years from the date of a return, the statute of limitations for how long the I.R.S. has to assess additional tax if all income was reported correctly. In addition, the I.R.S. requires that individuals be able to produce such records for six years if they fail to report income that is more than 25 percent of their gross income. There is no statute of limitation for failure to file or tax fraud.

Therefore, experts generally recommend keeping anything that verifies the information in your tax return for at least six to seven years. “My recommendation would be never throw away copies of your tax returns and checks made out to the government — anything else, I would say keep for at least six years,” said Jude Coard, a tax partner at accounting firm Berdon L.L.P.

[Click to continue reading Keep Your Financial Records No Longer Than You Must – NYTimes.com]

Maybe we need an intern, one that can be trusted to make judgement calls about sensitive financial information.