Fifth Tip to Help Avoid a Tax Audit:

The IRS continues to have several audit watch areas for compliance through 2013.  Small businesses are going to be a major focus this year.  This includes corporations, partnerships and sole proprietors.   While you never know when you may be selected for an IRS Tax Audit, these tips will help you understand what the IRS will be focusing on through the 2013 tax season.

 Audit Watch Area number 5 “Abusive transactions, especially international transactions“:

The IRS will continue to focus on the international tax gap. The IRS’ third voluntary initiative for foreign bank account reporting is under way, and the IRS will be looking to aggressively pursue taxpayers who hide assets overseas. The IRS will also focus on offshore transactions for large and small businesses.

Several foreign countries are now in cooperation with the United States and the IRS in sharing information for those trying to keep assets outside the United States and avoid paying taxes.

Taxpayers with foreign bank, security or other financial accounts, must file Form TD F 90-22.1 to report certain information on these accounts provided the aggregate value is $10,000 or more at all times during the year.  If a taxpayer is required to file this form and does not, they may be subject to stringent fines for non-filing that can include civil penalties, criminal penalties or both.