Skyping With the IRS

As the end of another tax season winds down, countless filers who may have, um, “embellished” on some deductions, hold their collective breaths that they won’t receive a letter inviting them down to the local IRS office for a chat.

Well, actually more like an audit.

The good news is that according to recent stats, taxpayers on the whole face a fairly low risk of being audited, as the IRS examined just 1.1 percent of the 141 million individual returns filed in 2010. If my math is correct, that’s roughly 1.6 million 1040s.

For those over $1 million in annual salary, your chance of being called in for an audit jumps to 12.5 percent. Phew! Good to know that’s one more thing I don’t have to worry about.

The majority of those investigations were conducted by mail, with just fewer than 400,000 done face-to-face with IRS agents and case workers.

But that may too change depending on the results of a current pilot test in Tampa, under the auspices of the National Taxpayer Advocate, Nina Olson, who recommended that the IRS establish the necessary technology enabling “virtual audits,” between filers and IRS caseworkers as a way to overcome ongoing problems with the IRS’s correspondence examination process.

Olson has noted that the Service’s automated correspondence program often has led to problems such as confusing audit notices that result in lower response rates and higher default tax assessments.

Apparently the filer-to-tax authority Skype fest or “Virtual Service Delivery” has been in use in Sweden for a number of years.  Considering that an individual pays taxes to three levels of government, coupled with a payroll tax over 30 percent and 15 percent of the country lies above the Arctic Circle where I can safely guess there’s not exactly a proliferation of tax offices,  I imagine there’s a whole lot of Skyping going on.

The VSD  approach in “Sverige”  (sorry, I could not resist showing off the one word of Swedish I know)  includes high-resolution cameras allowing taxpayers and employees to better see pertinent documents, determine relevancy to the case in question and suggest a resolution in real time.

I’m guessing that this new technology won’t necessarily help a filer who wrongly claimed 100 percent business use of that leased Audi with the 500 HP engine or someone who classified their personal 50-foot cabin cruiser as a boat charter business. But depending on the results of the pilot test it would expedite, and at the same time, personalize, a process that’s been known to drag on for years.

I just wouldn’t count on it gaining a lot of social members who want to chat. After all, it’s still the IRS.