A pilot project at the Internal Revenue Service to send out so-called “soft notices” to taxpayers whose tax returns appear to disagree with the information forms from their employers and banks could provide some benefits in terms of improved tax compliance.
However, questions about the cost and benefits of the pilot project remain, according to a new government report from the Treasury Inspector General for Tax Administration. The pilot project aims to improve taxpayer compliance by mailing informational materials to them when an income discrepancy is spotted in their tax returns.
The pilot project calls for the Automated Underreporter Program to send out notices designed to serve as educational tools to taxpayers whose returns show income discrepancies between the information they report to the IRS on their tax returns and related information that employers and financial institutions provide the IRS. Such “soft notices” do not require the taxpayer to pay more taxes, provide additional documentation, or even respond. The notices instead are designed to act as educational tools, as well as encourage self-correction by taxpayers, and improve voluntary tax compliance.
For more information: www.onts9.com