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A rather unsettled pattern of off and on showers possible Monday night ... More...
Chances of Getting Audited by IRS Lowest in Years
By Stephen Ohlemacher, Associated Press
WASHINGTON (AP) -- As millions of Americans race to meet Tuesday's tax deadline, their chances of getting audited are lower than they have been in years.
Budget cuts and new responsibilities are straining the Internal Revenue Service's ability to police tax returns. This year, the IRS will have fewer agents auditing returns than at any time since at least the 1980s.
Taxpayer services are suffering, too, with millions of phone calls to the IRS going unanswered.
"We keep going after the people who look like the worst of the bad guys," IRS Commissioner John Koskinen said in an interview. "But there are going to be some people that we should catch, either in terms of collecting the revenue from them or prosecuting them, that we're not going to catch."
Better technology is helping to offset some budget cuts.
If you report making $40,000 in wages and your employer tells the IRS you made $50,000, the agency's computers probably will catch that. The same is true for investment income and many common deductions that are reported to the IRS by financial institutions.
But if you operate a business that deals in cash, with income or expenses that are not independently reported to the IRS, your chances of getting caught are lower than they have been in years.
Last year, the IRS audited less than 1 percent of all returns from individuals, the lowest rate since 2005. This year, Koskinen said, "The numbers will go down."
Koskinen was confirmed as IRS commissioner in December. He took over an agency under siege on several fronts.
Last year, the IRS acknowledged agents improperly singled out conservative groups for extra scrutiny when they applied for tax-exempt status from 2010 to 2012. The revelation has led to five ongoing investigations, including three by congressional committees, and outraged lawmakers who control the agency's budget.
The IRS also is implementing large parts of President Barack Obama's health law, including enforcing the mandate that most people get health insurance. Republicans in Congress abhor the law, putting another bull's-eye on the agency's back.
The animosity is reflected in the IRS budget, which has declined from $12.1 billion in 2010 to $11.3 billion in the current budget year.
Obama has proposed a 10 percent increase for next year; Republicans are balking.
Rep. Ander Crenshaw, R-Fla., chairman of the House subcommittee that oversees the IRS budget, called the request "both meaningless and pointless" because it exceeds spending caps already set by Congress.
Koskinen said he suspects some people think that if they cut funds to the IRS, the agency won't be able to implement the health law. They're wrong, he said.
The IRS is legally obligated to enforce the health law, Koskinen said. That means budget savings will have to be found elsewhere.
Koskinen said he can cut spending in three areas: enforcement, taxpayer services and technology. Technology upgrades can only be put off for so long, he said, so enforcement and taxpayer services are suffering.
Last year, only 61 percent of taxpayers calling the IRS for help got it. This year, Koskinen said he expects the numbers to be similar. To help free up operators, callers with complicated tax questions are directed to the agency's website.
"The problem with complicated questions is they take longer," Koskinen said.
Your chances of getting audited vary greatly, based on your income. The more you make, the more likely you are to get a letter from the IRS.
Only 0.9 percent of people making less than $200,000 were audited last year. That's the lowest rate since the IRS began publishing the statistic in 2006.
By contrast, 10.9 percent of people making $1 million or more were audited. That's the lowest rate since 2010.
Only 0.6 percent of business returns were audited, but the rate varied greatly depending on the size of the business. About 16 percent of corporations with more than $10 million in assets were audited.
Most people don't have much of an opportunity to cheat on their taxes, said Elizabeth Maresca, a former IRS lawyer who now teaches law at Fordham University.
Your employer probably reports your wages to the IRS, your bank reports interest income, your broker reports investment income and your lender reports the amount of interest you paid on your mortgage.
"Anybody who's an employee, who gets paid by an employer, has a limited ability to take risks on their tax returns," Maresca said. "I think people who own their own business or are self-employed have a much greater opportunity (to cheat), and I think the IRS knows that, too."
One flag for the IRS is when your deductions or expenses don't match your income, said Joseph Perry, the partner in charge of tax and business services at Marcum LLP, an accounting firm. For example, if you deduct $70,000 in real estate taxes and mortgage interest, but only report $100,000 in income.
"That would at least beg the question, how are you living?" Perry said.
Koskinen said the IRS could scrutinize more returns - and collect billions more in revenue - with more resources. The president's budget proposal says the IRS would collect an additional $6 for every $1 increase in the agency's enforcement budget.
Koskinen said he makes that argument all the time, but for some reason, it's not playing well in Congress.
"I say that and everybody shrugs and goes on about their business," Koskinen said. "I have not figured out either philosophically or psychologically why nobody seems to care whether we collect the revenue or not."
Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap
More Business News
Last Update on December 19, 2014 18:50 GMT
WASHINGTON (AP) -- The FBI says it has enough evidence to conclude that North Korea was behind the hack attack against Sony Pictures Entertainment.
An FBI statement cites, among other factors, technical similarities between the Sony break-in and past "malicious cyber activity" linked directly to North Korea.
The Sony attack, reported late November, involved the use of destructive malware that caused the studio to take its entire computer network offline and left thousands of computers inoperable.
The breach resulted in the disclosure of tens of thousands of leaked emails and other materials. It later escalated to terrorist threats that promoted Sony to cancel the Christmas release of the movie "The Interview," a comedy about a plot to assassinate North Korean leader Kim Jong Un.
The FBI statement says North Korea's actions "were intended to inflict significant harm on a U.S. business and suppress the right of American citizens to express themselves."
SONY HACK-MESSAGE FROM HACKERS
NEW YORK (AP) -- Hackers have sent a new email to Sony Pictures Entertainment, praising the studio as "very wise" to cancel the release of "The Interview" and saying Sony's data is safe "as long as you make no more trouble."
The email was confirmed Friday by a person close to the studio who requested anonymity because the person wasn't authorized to speak publicly about the matter.
The message warned to "never" release the film "in any form," including on DVD. The email was sent to several employees of the Culver City, California company.
The Obama administration on Friday formally accused the North Korean government of being responsible for the devastating hacking attack.
WASHINGTON (AP) -- T-Mobile US will pay up to $90 million, mostly in refunds, for billing customers for cellphone text services they didn't order, under a settlement with federal regulators.
The Federal Trade Commission announced the agreement Friday with T-Mobile over billing for unauthorized charges, a practice known as "cramming." T-Mobile, the fourth-largest U.S. cellphone company, is paying refunds to affected customers plus $18 million in fines to the 50 states and the District of Columbia, and $4.5 million in fines to the Federal Communications Commission.
The FTC sued T-Mobile in July, accusing it of billing customers for subscriptions to text services like $9.99-per-month horoscopes or celebrity gossip updates that they didn't want or authorize.
T-Mobile collected 35 percent to 40 percent of the charges, the FTC alleges.
WASHINGTON (AP) -- Former Federal Reserve Chairman Paul Volcker is criticizing a decision to delay full implementation of a rule that bears his name and aims to curb banks' risky investments.
The Fed said Thursday that it would delay until July 2017 the deadline by which U.S. banks will have to sell off potentially volatile holdings in private equity, venture capital and hedge funds.
In a statement, Volcker calls it "striking that the world's leading investment bankers, noted for their cleverness and agility in advising clients" need to take so long to reorganize their own activities.
Volcker says the banks' real aim may be to delay implementation of the law until they can get it changed. Congress passed the Volcker Rule in an overhaul of financial regulations after the 2008 financial crisis.
WASHINGTON (AP) -- Unemployment rates fell in 41 U.S. states in November and were unchanged in six more, reflecting healthy job gains across the country.
The Labor Department says unemployment rates rose in only three states: Connecticut, Louisiana, and Washington state.
Solid economic growth since the spring has encouraged more employers to step up hiring. The U.S. has added nearly 2.7 million jobs this year, the most since 1999. That has lowered unemployment rates in most of the country.
North Dakota's 2.7 percent unemployment rate was lowest in the nation. Mississippi's 7.3 percent rate was the highest.
The biggest job gains occurred in California, which added 90,100 jobs in November, followed by Florida, which gained 41,900. Texas added the third-most jobs, with 34,800.
CHICAGO (AP) -- The average price for a gallon of gas has fallen below the $2.50 mark for the first time in about five years. Oil analyst Patrick DeHaan of GasBuddy.com says the price of gas has dropped 41 cents over the last month with the average now at $2.46 a gallon.
According to GasBuddy.com, Texas features the lowest gas price with a station in Keller selling fuel for $1.69.
DeHaan says while the price of gas should continue to fall as the year comes to a close, the rate will not be as dramatic since gas prices have just about matched the steep decline in oil prices.
DETROIT (AP) -- Chrysler is recalling nearly 257,000 older Ram pickup trucks because the rear axle can seize or the drive shaft can fall off.
The recall covers Ram 1500 pickups from the 2005 model year.
Chrysler says in documents posted Friday by U.S. safety regulators that the rear-axle pinion nut can come loose. That can cause problems that make the trucks spin out of control.
The recall comes after an investigation by the National Highway Traffic Safety Administration that began in June.
The agency found 15 complaints, including seven drivers who reported that the wheels locked at speeds over 50 miles per hour. At the time, no crashes or injuries were reported.
Dealers will install a fix at no cost to owners. The recall will begin in February.
WASHINGTON (AP) -- Health officials say prepackaged caramel apples are linked to five deaths and more than two dozen illnesses in 10 states.
The Centers for Disease Control and Prevention says investigators are trying to determine the specific brands that were involved. But consumers are being warned not to eat prepackaged caramel apples until more is known.
The CDC says it knows of 28 cases in which people were sickened by a form of bacterial food poisoning called listeria, with 26 hospitalized. They got sick between Oct. 17 and Nov. 27. CDC said it's possible other illnesses have occurred since then.
Two of the deaths were in Minnesota, according to state health officials. The CDC said the illnesses also occurred in Arizona, California, Missouri, New Mexico, North Carolina, Texas, Utah, Washington, and Wisconsin.
NEW YORK (AP) -- Shares of cancer treatment company Juno Therapeutics Inc. are surging 60 percent in their stock market debut.
Juno genetically engineers a patient's own white blood cells to find and kill cancer cells in the body. It says its clinical trials have shown evidence of tumors shrinking.
The Seattle-based company raised $264.5 million after selling more than 11 million shares at $24 per share. It plans to use the cash raised to continue trials and studies. The stock is listed on the Nasdaq stock market under ticker symbol "JUNO."
NEW YORK (AP) -- Blackberry reported an adjusted profit for its fiscal third quarter, surprising Wall Street.
The Canadian company's stock climbed almost 3 percent in Friday premarket trading.
For the period ended Nov. 29, the company lost $148 million, or 28 cents per share. That compares with a loss of $4.4 billion, or $8.37 per share, a year earlier.
Stripping out some charges, earnings were a penny per share.
Analysts polled by Zacks Investment Research predicted a loss of 6 cents per share.
Revenue declined to $793 million from $1.19 billion. Analysts were looking for $927.8 million, according to Zacks.
Blackberry Ltd. said that it continues to target sustainable adjusted profitability some time in fiscal 2016.
NEW YORK (AP) -- Another major publisher has reached a multiyear deal with Amazon.com.
Amazon and Macmillan CEO John Sargent confirmed this week that they had agreed to terms for both print and electronic books. The deal will allow Macmillan to set prices for e-books, an arrangement known as the "agency model," and appears similar to agreements Amazon reached in the past two months with Hachette Book Group and Simon & Schuster. Authors at Macmillan range from Jonathan Franzen and Hilary Mantel to Oprah Winfrey and Bill O'Reilly.
Both Macmillan and Hachette have had public feuds with Amazon over terms for e-books. In 2010, Amazon briefly removed "Buy' buttons for all Macmillan releases. For months in 2014, the retailer restricted availability and reduced discounts for numerous Hachette books.
BANGKOK (AP) -- Thai Union Frozen Products is acquiring Bumble Bee Seafoods, a major seller of canned tuna in the United States, for $1.5 billion.
The Thai company says Friday that the purchase of Bumble Bee, which is owned by private equity firm Lion Capital, should be completed by the second half of 2015,
Its statement said Thai Union has annual sales exceeding 100 billion baht ($3 billion), and San Diego-based Bumble Bee Seafoods generates annual sales of approximately $1 billion.
The Thai company already owns Chicken of the Sea, another major U.S. provider of packaged seafood.
MIAMI (AP) -- The Cuban cigar is set to make its first legal appearance U.S. in years, with relaxed guidelines allowing travelers to return with a few in their suitcases. But the cigars won't roll into stores just yet, and owners say they aren't worried about business.
Some tobacco shops owners in Miami's Little Havana say most customers can't afford to travel to Cuba for cigars and won't do so regularly.
Licensed American travelers can return home with $100 in alcohol and tobacco products. Experts say that's three to 20 cigars.
Cigars brought back to the U.S. must be for personal use, not resale. If the U.S. embargo with Cuba is eventually lifted, many tobacconists say they'd welcome the change. They could add Cuban tobacco to their blends, and many believe they interest in cigars would increase.
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