Quote:
Originally Posted by Jeffrompa
If you do not pay the correct amount on your 10-99 , also they don’t audit you if someone thinks they can get away with it . They just tell you what you owe and collect it .
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The entire IRS system is automated. I can guarantee you that every single 1099-MISC, 1099-INT, 1099-DIV, 1099-R, W-2 and any other miscellaneous 1099 form or statements they get, like SSA forms for social security, your HSA account, the 1095s for health insurance, and so on, are all eventually input into their system and tied back to every single taxpayer's return. Now it could take a year or two before they get around to doing it but, rest assured, they will. They have a max of three years from when a return was filed or originally due to go back and audit or question it. If their system kicks out any discrepancy in the numbers, or difference in the calculated tax, the computer immediately assumes it is correct and spits out a letter that gets mailed to the taxpayer saying they have discovered an error and/or discrepancy in figuring the tax they owed, here is the amount they have come up with, plus any applicable interest and penalty charges, and ask you to either pay it in full within a short period of time, or get back to them to let them know why you don't think you owe what they are asking for, and to provide proof of same. So in other words, you are guilty till proven innocent when it comes to the IRS.
Now as to Jeffrompa's statements, you might want to check your English as what you typed doesn't make a lot of sense. But, to maybe try to answer what you were getting at, if you get a 1099 from someone reporting a certain amount of sales, as long as the IRS can find at least that amount reported somewhere on your return, you probably won't get a letter/notice from them. For example, say a card dealer sells both on Ebay and at shows throughout the year. Say they get a 1099 from Paypal after the year ends for $100,000 of Ebay sales. And lets say they sell an additional $50,000 during the year at shows, for none of which anyone sends them a 1099. If on their personal tax return for that year they file and report the card business as a sole proprietorship on Schedule C, as long as the Gross Sales line item on that Schedule C shows at least the $100,000 that was reported to the IRS on the 1099 they received from Paypal, the IRS system will not show a discrepancy or deficiency in the income reported, and probably no letter or notice will be generated and sent to the taxpayer. End up reporting say only $90,000 of gross sales on that same return, which is less than the amount of the 1099 they got, and I can pretty much guarantee you they'll be getting an IRS letter or notice at some point about the discrepancy.