The Treasury Inspector General for Tax Administration
recently issued a report highlighting a compliance gap
regarding the reporting of alimony deductions and income.
The report noted a significant disparity in the number of
tax returns that report deductible alimony payments and
the number of tax returns that report taxable alimony
income. As the report notes, the number of returns that
report deductions for alimony payments is significantly
larger than the number of returns that report alimony
income.
The IRS has agreed to implement most of the procedures
recommended in the report to try to reduce the compliance
gap. Taxpayers should therefore expect the IRS to be more
likely to review tax returns that report deductions for
alimony or that should report taxable alimony income, and
to be more aggressive in assessing related penalties.
If you have questions about how to report your alimony
payments, please contact David Guarino or Cory Bilodeau,
the Co-Chairs of the Tax Practice at Fletcher Tilton.
