Granted, this is probably because I had different things to worry about when it passed, but I didn’t think about how the Tax Cuts and Jobs Act would affect tax fraud. A recent article from Accounting Today, though, takes a look at how some proponents claimed that it would have this effect.
Spoiler alert: there is not a whole lot of optimism among tax professionals that that will be the outcome.
On one hand, it is easy to see how people felt that less fraud would be a positive outcome. The setup of the new plan is that more people will be taking fewer deductions, and that seems like it would provide fewer places for people to cheat.
On the other hand, as some interviewed in the article allude to, it just means that people will probably look for other places to pad their numbers. What this seems to come down to is that the rules are different, but it is not as if people are any more thrilled with paying taxes.
And illegal actions aside, people should look for places where they can use the new rules to their advantage. Contrary to what some say, it is not as if taxes have suddenly become simple. The rules are complex and those with the proper knowledge will find ways to use it to their advantage. This isn’t fraud, and even should be encouraged, but the mindsets are similar – getting the most that you can returned to you.
Also mentioned in the article is the funding of the IRS, something that tax reform did not really handle. The agency has been receiving less funding for years and now has to implement a large number of new rules. It is easy to see how this could lead to more things slipping through the cracks. This is never something one should count on, though.
As a personal note, I am sure the new rules will also lead to new mistakes. I only call them mistakes because not everyone is going to know how to work within the new rules and it will lead to honest errors. The IRS won’t simply overlook these, though.
No one likes to pay taxes, and only a very simple system would present a situation where people could not try to turn things to their advantage and also know they’re doing everything correctly. The complicated system isn’t going away, though, so just be sure you operate in a legal way with the proper support. That is just good practice no matter the rules and what we always strive to provide.
Another good practice to mention now is thinking of disaster plans. I know I spoke of this last week, but with the destruction from Hurricane Florence that followed, I thought it would do well to mention it again. Especially after I read this article about how many businesses don’t have a disaster plan, never mind individuals.
Again, this is something that is not fun, but something is worth spending the time to do.
As I also mentioned last week, the IRS does offer some relief for those affected by natural disasters, and this has happened for those affected by the latest storm. For those who want the official data on it, please click here.
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