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Transformation: Working Towards a Data-driven Audit Division

Transformation: Working Towards a Data-driven Audit Division. Background/Goals Desk Audit Selection Field Audit Selection Other Initiatives. Background/Goals. Audit already has: A data warehouse A system for tracking returns through the audit process Some models for audit selection

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Transformation: Working Towards a Data-driven Audit Division

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  1. Transformation: Working Towards a Data-driven Audit Division • Background/Goals • Desk Audit Selection • Field Audit Selection • Other Initiatives

  2. Background/Goals Audit already has: • A data warehouse • A system for tracking returns through the audit process • Some models for audit selection • Audit needs: • More quality control on their data • More current data • A data-driven approach to audit selection

  3. Desk Audit Selection Replaced manual review of every return with random samples based upon correlation of past desk audit results with various lines on return.

  4. Field Audit Selection • Evaluating coverage statistics • Loading and cleansing data • Next step: models

  5. Other Initiatives • Identifying Non-filers/underreporters through new matches • Computer-assisted audits • Plan for handling more electronic data

  6. Tax Gap Initiatives 2008 Bill Comiskey NYS Dept of Taxation & Finance Deputy Commissioner Office of Tax Enforcement 518-457-9692 william_comiskey@tax.state.ny.us TaxRAPPOctober 27, 2008 7 55th Annual Tax Institute

  7. Increased Enforcement Guidelines for criminal tax investigations The new Voluntary Disclosure Program Focus on fraudulent tax preparers TAX GAP INITIATIVES 2008 DTF 2008-09 and Beyond 8 55th Annual Tax Institute

  8. INCREASING ENFORCEMENT 9 DTF 2008-09 and Beyond 55th Annual Tax Institute

  9. INCREASING ENFORCEMENT 10 Fiscal Year Fraud cases opened Cases referred DTF 2008-09 and Beyond 55th Annual Tax Institute

  10. On website – http://www.tax.state.ny High level review of factors considered No fixed thresholds - Requires individual assessment of each case Factors relating to nature and seriousness of the misconduct Factors relating to the subject of the inquiry, including: Tax and criminal history of the subject Extent of restitution paid Willingness to cooperate Acceptance of responsibility and willingness to correct behavior Collateral consequences Factors relating to the strength of the case Factors relating to the objective of achieving deterrence GUIDELINES FOR CRIMINAL CASES DTF 2008-09 and Beyond 11 55th Annual Tax Institute

  11. What is this new program and why do we need it? Is it really an “early Christmas present for taxpayers?” Isn’t it just another AMNESTY? Who is eligible? Is the program available to taxpayers who deliberately cheated on their taxes? Is it available to taxpayers who participated in prior amnesties? Voluntary Disclosure Program DTF 2008-09 and Beyond 12 55th Annual Tax Institute

  12. Voluntary Disclosure Program How do taxpayers know that they won’t get hurt by telling the Department about their tax liabilities? Can taxpayers apply anonymously through a practitioner? What benefits do taxpayers get if they participate? Will the Department accept a limited look back clause? What are the taxpayer’s obligations and what are the consequences if they fail to live up to their obligations? DTF 2008-09 and Beyond 13 55th Annual Tax Institute

  13. + Its EASY to apply online! Voluntary Disclosure Program DTF 2008-09 and Beyond 14 55th Annual Tax Institute

  14. Voluntary Disclosure Program Are there any results yet? What is the Department doing to promote the Program to taxpayers? General outreach Targeted outreach DTF 2008-09 and Beyond 15 55th Annual Tax Institute

  15. Fraudulent Preparer Initiative 16 DTF 2008-09 and Beyond 55th Annual Tax Institute WHY FOCUS ON TAX PREPARERS?

  16. 55th Annual Tax Institute

  17. Fraudulent Preparer Initiative 18 DTF 2008-09 and Beyond 55th Annual Tax Institute TAKING ACTION • Using technology to identify questionable preparers • Aggressively using traditional law enforcement techniques to reveal fraudulent conduct by tax preparers • Building criminal cases against fraudulent preparers and their clients • Pursuing civil preparer fraud penalties • Inviting clients to participate in Voluntary Disclosure

  18. Fraudulent Preparer Initiative 19 DTF 2008-09 and Beyond 55th Annual Tax Institute Ongoing undercover operations What was our operative plan? How did it work? What are the results to date?

  19. Fraudulent Preparer Initiative 20 DTF 2008-09 and Beyond 55th Annual Tax Institute Results The undercover operation revealed serious fraud by some tax preparers, especially in the greater NYC area. • Not a scientific sample but the numbers are staggering • Exposed both licensed and unlicensed practitioners • The tapes say it all

  20. Fraudulent Preparer Initiative 21 DTF 2008-09 and Beyond 55th Annual Tax Institute Expanding undercover operations “Turning” corrupt clients and corrupt preparers

  21. Fraudulent Preparer Initative 22 DTF 2008-09 and Beyond 55th Annual Tax Institute Next steps Enlisting the professions to help establish standards for all paid tax preparers Publicizing our findings and efforts Licensing/registering/enrolling paid preparers Enacting laws to improve enforcement

  22. Tax Gap Initiatives 2008 Bill Comiskey NYS Dept of Taxation & Finance Deputy Commissioner Office of Tax Enforcement 518-457-9692 william_comiskey@tax.state.ny.us TaxRAPPOctober 27, 2008 23 55th Annual Tax Institute

  23. New Directions in Audit & Enforcement Michael Hyman Deputy Commissioner

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