The number one IRS audit risk for S Corporations is salary and wages paid to officers of the corporation.

This is probably the most important letter I will write to you this year.  There is no doubt that you, as an S Corporation owner have made very good tax move.  The popularity of  S Corporations is growing each year.  More than six million S Corporation returns will be filed this year.  They offer more advantages than any other choice of business entity today.  You have chosen wisely.

However, there is one rather large S Corporation pitfall that I am required by IRS Circular 230 to warn you about.  

The number one IRS audit risk for S Corporations is salary and wages paid to officers of the corporation.

Here is what the IRS says about wages and salary paid to officers of Subchapter S Corporations:

Corporate officers are specifically included within the definition of employee for FICA (Federal Insurance Contributions Act), FUTA (Federal Unemployment Tax Act) and federal income tax withholding under the Internal Revenue Code. When corporate officers perform services for the corporation, and receive or are entitled to receive payments, their compensation is generally considered wages.  Subchapter S corporations should treat payments for services to officers as wages and not as distributions of cash and property or loans to shareholders.

S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.  Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates.

The Internal Revenue Code establishes that any officer of a corporation, including S corporations, is an employee of the corporation for federal employment tax purposes.  S corporations should not attempt to avoid paying employment taxes by having their officers treat their compensation as cash distributions, payments of personal expenses, and/or loans rather than as wages.

Although this IRS interpretation of reasonable salary just recently updated in October 2011,  is somewhat arbitrary, it is extremely important not to overlook paying yourself a salary before the end of the year.  

What should you do? Don’t panic.Call us.  We can help. There is still time to fix any oversights.

Remember what Ben Franklin said an ounce of prevention is worth a pound of cure.  He also said that there are only two certain things in life:  death and taxes.

Our 30th version of the same story.

Sally Smith, was a smart businessperson, she knew the basics of year-end tax planning.

1.  Postpone income to next year.
2.  Pay as many expenses as possible this year.
3.  Keep inventory level low.
4.  If you are going to make a capital investment, do so before the end of the year.
5.  Double check for missing deductions.
6.  Invest in an IRA for similar type account.

Sally owns a retail store and faced the year end with her eyes wide open.  Sally knew that a few strategies would pay big dividends on April 15.  Here is what she did to reduce her tax liability:

Since Sally was operating her business on a cash basis and relied upon cash sales through her cash register, she did not have the opportunity to postpone much income.  She has established a policy for many years to close her books on December 28, which gave her opportunity to defer three days of sales to next year.

Sally then reviewed her bills.  She started to write out checks for her expenses. She wrote checks for all expenses due, even if some expenses were due in January.  She dated her checks for December 28, 2011 to be sure that the expenses were recorded for this year on December's bookkeeping.  Her checks written totaled to almost $10,000.  Her one simple strategy, accelerating expenses meant that Sally saved over $4,000.00 in income tax this year.

Since you pay tax on your inventory at the end of the year, Sally knew that reducing her inventory to the lowest amount possible was important for her. First, she decided to review her inventory to see if she had things that have been gathering dust.  She found items that in fact had been sitting around for more than three years.  She decided to mark those items down and immediately started an inventory reduction sale for those items.  She knew that the value of  her inventory was based upon her costs of the items, not the selling price.  She also knew that items that were partially used or supplies not for resale did not count as part of her inventory.

Sally had been debating whether to purchase a new computer for her business. The local computer store was offering a "six-months same as cash" financing offer for the purchase of new computers.  Sally decided to purchase the computer now, electing to take advantage of the special financing offer.  She knew that she could deduct the full purchase price of the computer on her tax return, even though she did not pay for it right away.  When you purchase something using a credit card or borrow the money, as Sally did, you get to deduct the amount when you purchase the item.  The $3,000 computer saved Sally $1,200 in income tax.

As part of her year-end review Sally took a minute to see if perhaps she has recorded all her business expenses as part of  her monthly record keeping.  She knew that the credit card that she had been using exclusively for business had some interest payments that were not included. She made a note to record her year-end statement from her credit card company to make sure that it was included as interest paid on her year-end documents to her accountant.  In addition, she decided to review her automobile mileage and other receipts for expenses that she might not have had for her business and had a chance to record in her monthly record keeping.

Sally also knew that she had time to make her annual IRA contribution until April 15 of next year.  She decided not to make it till next April.  She also made a note to talk to us about Roth IRA accounts and analyze the different options available to her.  One of her options was a self-employed Pension Plan commonly called a SEP. IRA's.  SEP. IRA's do not have to be opened or funded until the due date of your return.  That means that Sally doesn't have to open or make a contribution to a SEP. IRA for the 2011 tax year until April 15, 2012.  She can also contribute a larger amount to her SEP. IRA than she could to her regular IRA.  However, she was reluctant to open one because she also knew that she would have to contribute an amount to her full time employees.  She made a note to ask her accountant what that contribution would be and what her resultant tax savings would equal.  She also thought her accountant might have ideas on how to "cushion" the employee's contribution issue.

Sally knew that her year end review of her tax situation saved her almost $7,000 this year.  She made a note to review her year end information before we prepared her tax return in 2011.




SAVE TAXES...REMEMBER BEFORE JANUARY 1, 2012

1) Postpone income to next year.
2) Pay as many expenses as possible this year, even if you do not send the checks off till January, be sure to write the checks for the expenses.
3)  Keep inventory at a low level.
4)  If you are going to make a capital investment, do so before the end of the year.
5)  Double check for missing deductions.
6)  Invest in an IRA or similar type account.

57,000 page tax return

GE filed a 57,000 page tax return and reported $14 billion in profit and paid no taxes in 2010 has been widely reported.  However, according to the Weekly Standard Online the size of the tax return was just recently revealed.

The fact that GE paid no taxes in 2010 was widely reported earlier this year, but the size of its tax return first came to light when House budget committee chairman Paul Ryan (R, Wisc.) made the case for corporate tax reform at a recent townhall meeting. "GE was able to utilize all of these various loopholes, all of these various deductions--it's legal," Ryan said. Nine billion dollars of GE's profits came overseas, outside the jurisdiction of U.S. tax law. GE wasn't taxed on $5 billion in U.S. profits because it utilized numerous deductions and tax credits, including tax breaks for investments in low-income housing, green energy, research and development, as well as depreciation of property.







Read more by clicking on the above link. 

The 5 Biggest Mistakes Most Taxpayers Make When Choosing A Tax Professional!

Choosing a tax professional to help you file your taxes is a BIG thing. We are not just talking about choosing a plumber to come unstop your toilet or picking the right mechanic to fix your car. Filing a tax return requires dealing with the #1 government agency that can cause more harm to your family than any other… the Internal Revenue Service (or the IRS!) Now don’t get me wrong. Getting a good plumber is important. And of course, getting your car fixed up properly is definitely something you want done right as well. But, taking the “filing of your federal (and state) tax return” lightly can be a huge mistake!

When you choose the wrong plumber, what happens? You either don’t get your problem fixed the first time and the guy has to come back – which is a pain. Or, the plumber tracks dirt on your carpet walking in your home and you’ve got to clean up after his mess. Again, a hassle and an inconvenience. In the case of picking a bad mechanic, the wrong guy can screw up your car big time! I actually hate it when this happens. (My guess is we’ve all had some person do something to our car one time in life that turned out to be a royal pain in the tail.) Either we had to spend more money to fix something else with our car or we never got the problem actually resolved or it took SO many trips to the garage to fix our automobile that once the ordeal was over, you’d just as soon walk to work now! Again, these kind of poor choices on our part cost us extra money, time and a lot of aggravation.

But, Choosing The WRONG Tax Professional To Help You File Your Taxes Could Put You In Some Serious Hot WaterWith The IRS!

Let me ask you a question. Would you rather have to call another plumber to come fix your leaky pipes or get a nasty letter from the IRS threatening to freeze your bank account if you don’t pay a large sum of back taxes, including penalties and interest? Yeah, me too. I’d rather call another plumber or make another trip back to the auto mechanic’s garage to fix my car right. But having to deal with the IRS by myself? No thanks! Even if I didn’t owe a ton of back taxes, I still don’t want MY RECORD to show some IRS agent that there has been some discrepancy in the past so RED FLAGS start to fly and more bureaucratic people begin looking through all my past tax filings and current income holdings and basically, taking my social security number and poking around in my private life! (If you think they won’t do this, the wool might have already been pulled over your eyes ...) Just look at the nightly news one night. They can do a lot of things you won’t want them to do. However, if you keep a clean slate (no IRS correspondence with you related to filing your taxes correctly), the opportunities for them to mess with your personal stuff will be limited.

I THINK YOU’LL AGREE WITH ME …. CHOOSING THE RIGHT TAX PROFESSIONAL IS A VERY IMPORTANT DECISION!

With that said, I’d like to share with you The Top 5 Biggest Mistakes Most Taxpayers Make When Choosing A Tax Professional!

Big Mistake #1:

Not Choosing An Expert In The Type Of Tax Service YOU Want!
Most people know what they want when they are looking for someone to help them. However, in the case of filing a tax return, most folks just assume all accountants, CPA’s or tax preparers are about the same. But just like most other professional services, nothing could be further from the truth. Each tax professional has certain qualifications. And again, people who help taxpayers file taxes for a living have their own strengths and weaknesses. But here is the rub: Too many people don’t match up what they want with the strengths of a paid tax professional. And if you fall into this category, listen closely. First, let’s be clear. What do you want from a tax preparer? From my experience, here are the most common “wants” of regular middle income taxpayers. You want an accurately filed tax return. You want the tax filing process broken down into layman’s terms. You don’t want to hear about someone else’s tax filing scenario. No, you are just interested in your own tax situation -- explained so you can understand. And once you’ve “got it” … you want the tax preparer to give you a heads up about some possibilities in the future to save even more money or qualify for other deductions that would legally add more money to your pocket at tax time. You want assurances everything your tax preparer is doing for you is valid and correct, so a guarantee(s) is essential to the process. And of course, you want to “close the book” on this year’s tax filing in a reasonable amount of time. No dragging this process out for many days or weeks. You want to know what’s going on with your taxes in a day or two, gather more info (if needed) which might reduce your tax burden and/or increase the amount of refund money Uncle Sam owes you – and then file your taxes so you can be done with it!
Oh, and if you ARE getting a refund, you want a tax firm who can get you the most money back the fastest … with the most electronic filing options available.
Bottom line: You want accuracy … you want clarity … you want to be aware of beneficial tax options … you want a Worry Free Guarantee … you want an efficient use of your time …. you want your refund money back in your hands fast …. And at the end of the day, you want to KNOW you got the most money back from Uncle Sam AND you know the IRS will stay off your back so you can sleep like a baby at night!
If the tax professional you are talking to (or the tax practitioner you currently use) can’t do what you want, don’t give him/her your business. Go to someone who will be on your side, looking out for your interests and not treating you like a number.

Big Mistake #2:

Letting A Tax Preparer Help You File Your Taxes Without A Guarantee!
We already touched on this topic of guarantees earlier, but since having one or more guarantees is so important – especially when it comes to filing your taxes with the IRS – I thought I better go into a little bit more detail just to make sure you are clear on what should be expected of a tax professional in this area. In my view, the more guarantees, the better. And I’m talking about IN WRITING guarantees, NOT some tax professional verbally telling you, “Oh, yeah – you’ll never have a problem if I prepare your taxes … but if you do, I guarantee I’ll fix it. No problem.” That my friend, is not the kind of ‘guarantee’ I’m talking about. I’ve heard too many horror stories about taxpayers getting a letter from the IRS, then they take it to their accountant, and then the letter sits on a desk gathering dust. Or stories about the CPA who makes some calls on your behalf, but you get charged an arm and a leg in the process. Or sadly, a taxpayer doesn’t get any help from the person who prepared their taxes for them so they go it alone and call the IRS themselves and figure out what to do and not to do during this normally ugly IRS correspondence … THIS can be a nightmare! Don’t go down this road! In your case, just make sure the paid tax practitioner you are working with has guarantees, in writing, for you to hold on to if ever needed. And make sure the guarantees include stuff you want guaranteed! Let me give you an example. I’ve seen some accountants guarantee they will file your taxes for you by April 15th or they will file an extension for you. Well, whoopdy do! That sure makes you feel good in the morning, doesn’t it? Other weak guarantees I’ve seen in the tax industry are, “We guarantee we will begin preparing your tax return the same day we meet with you.” That means nothing to me. I don’t care when you start preparing my taxes. I want to know how long it is going to take you to finish it and do so without leaving out silly errors you know you should have caught.
But truth be told….
(if you got to sneak a peak behind what REALLY goes on in most tax professionals’ offices, you’d be SHOCKED!) So let’s pretend you knew what was really going on once you left your accountant’s office – I GUARANTEE you’d be saying (or thinking) the following:
…. you barely looked at my return because you were too overloaded with other tax work and you didn’t hire enough competent employees to help you during tax season …
.
…. you don’t trust other tax preparers doing your returns, but since you get so tired doing everything yourself, stupid mistakes become common place and you hope no one notices (kind of like an ostrich with his head in the sand) ....
…. if I decided to take my taxes and go somewhere else, you won’t care for very long because you’ve got too much going on, getting so many different files mixed up, you don’t have time to even notice ….
The moral of this story is: Protect yourself and file your taxes with a tax business that’s been around for a long time and can back up everything they do with multiple guarantees. And remember: the guarantees should be in areas you care about, like:
Tax Return Accuracy …Speed of Service…Most Money
Legally Yours …Ongoing IRS Protection For Years After Filing …
These are the things YOU care about! Make sure the tax professional you choose stands behind these critical areas of tax filing so you get the most out of your tax filing experience!

Big Mistake #3:

Picking A CPA With Too Much “Accounting” Experience That Doesn’t Relate To You!
Most people don’t realize this, but many CPA’s usually spend most of their time doing accounting and auditing work – NOT taxes! (CPA = Certified Public Accountant) They get paid to sign off on accounting, payroll and complicated bookkeeping for larger businesses. So when it comes to preparing taxes for the regular middle income family, it’s just not something they’ve been spending their time thinking about or doing much of most of the year. CPA’s have a ton of experience in many very complicated accounting practices, doing very complex audit work and usually doing a really great job helping some large business or very high net worth rich guy with his investments and taxes. But, for most tax returns that are filed each year … nah. Look, does this sound like your tax return? I thought so. You are not alone. The majority of people will never need the experience coming from a CPA’s background because the accounting and auditing work does not relate to their normal family income status. Am I saying all CPA’s are wrong for you to choose to file your taxes? Absolutely not! There are some Certified Public Accountants who take the time to keep up with the latest tax laws. (Heck, my best friend is a CPA. He prepares taxes and knows what’s going on in the tax world each year.) But, in most cases you are better off finding a tax preparer who is good at doing what you need done. And in this case, if the tax preparer preparers a lot of middle income tax returns already, that’s even better. Think of it this way: Would you use a sledge hammer to hang a picture frame? (I didn’t think so.)
Remember: Go with a tax professional with TAX preparing experience, not auditing or accounting or something else that doesn’t relate to you!

Big Mistake #4:

Going With A National “Brand Name” Tax Firm With Image Advertising!
I’m not going to name names here. But, just about everyone has heard of these brand name tax firms right down the block in most cities and small towns. They spend millions of dollars every tax season on “brand building awareness” ad campaigns just so you will think of them when it comes time to file your taxes. The problem is, a “brand name” never prepared anyone’s taxes – people do! So you can have all the famous names, fancy Super Bowl ads and catchy slogans, but when push comes to shove, it is a real person helping you. And behind that one tax preparer, there should be other people who do “return reviews” – and, a manager who is held accountable for quality work -- and a support staff to proactively trouble shoot any issue that might arise – and on and on. Getting a quality tax service from a reputable tax business has very little to do with the award winning promotion, and everything to do with the quality of the tax preparer and the organization to back him or her up. Outstanding personal service just because some smiling face says it on the TV… not a chance! Better listen to what OTHER taxpayers like you are saying. Have they already experienced that particular tax firm’s services in the past and can testify to this effect? If so, that has more credibility than some high paid ad agency putting together some commercial on Madison Avenue. (Hearing it from the “horse’s mouth” so-to-speak is even better. If you can listen to what other real people are saying about their tax filing experiences, and you like what they are saying -- then by all means, go to that particular tax business and give’em a shot at filing your taxes this year.) So for the record, don’t be “blind” to the fact that fancy ad jingles translate into the high quality tax services. They don’t. To be blunt, usually the more IMAGY the promotion (nice looking models smiling in the commercial, pretending nothing would ever go wrong with your taxes -- none of which ever happens in the real world) ... the WORSE OFF your tax service will be. Now, what I just said is not scientifically provable, but if you’ve been around the block enough like I have, you know what I mean.

Big Mistake #5:

Paying Too Little OR Too Much When Filing A Regular Tax Return!
Some of what I just said might sound odd to you? Why would I not want to pay too little to have my taxes filed with a tax professional? Well, let me explain. What’s too little or too much? It depends. Let’s start with the “paying too little” for filing a tax return. Who do you think are the tax professionals charging the least amount or advertise the lowest fees for tax preparation? Some of these folks are the “fly-by-night” tax preparers. Yeah, they know a thing or two about filing some tax forms. What they don’t know, they try and figure out as they go along. These are nice people for the most part, but getting them to be your tax representative with the IRS might not be the wisest decision. Other tax professionals who “low ball” on price work out of their house or they have very limited resources related to keeping up with the tax codes and ever changing tax laws. Many times they are “one man/woman” operations so they do your taxes, charge you a low price, but have zero accountability for their work. No in-house quality control, no double-check audit process, no compliance reviews. Do you need all of this? Yes, in most cases. But, if you are a middle income taxpayer with a couple of schedules, extra forms and deductions you are not sure about … well, it’s your neck (and your money) that’s on the line … so I’d definitely say yes then! What about paying too much when filing a tax return? Did you know to some people, paying the MOST money to file their taxes is like a badge of honor… (or if you want to know the secret truth -- it makes the person feel important [like a “somebody”] because they paid $500.00 or $700.00 or $1,200.00 to have their taxes filed!) I’m a rich important guy, “I paid my accountant $600 bucks to file my taxes this year!” as he sips his mint julep at the country club. No thank you! Yes, you’d be surprised, but in a lot of cases, when someone in the middle income tax bracket wants to be sure they’ve filed correctly with the IRS and they (very foolishly) go pay too much at some CPA’s office… with the leather couch and fancy plants and wall hangings … and after they write the check to the accountant for $500 bucks or whatever, they feel pretty good, but their gut tells them something is wrong. Well, there usually IS something wrong. It’s called overpaying when you don’t have to! Regular retail tax offices with nice, clean working environments are just fine. Getting a quality preparer with multiple guarantees backing up their work, ongoing support and year round access to a manager or person in charge is all you need. Do you need to pay $500.00 or $1,000.00 for that? Actually, on most middle income returns, you can pay in the $175 to $275 range and be just fine. Some high-priced tax professionals will charge you $500 or $600 for the same forms and schedules. Or you can find a “Fast Eddie” to help you file your taxes and probably only pay $100 or less. My advice is to find a tax professional who charges by the form so he/she is not pulling fees out of thin air. Like I said, you can over pay or actually under pay – either way, both will come back to bite you in the end. Getting the best value for your money is always the right way to go!

CONCLUSION

“Taxing” Lessons Learned….

I hope this Free Report has opened your eyes to lessons about filing your taxes with a paid tax practitioner. Some people reading this Report will conclude -- oh well, “I’ll just file my taxes to Uncle Sam myself. It doesn’t seem like that big of a deal anyway” With all due respect, this kind of attitude can get you is some hot water if you don’t watch out! Choosing the RIGHT tax professional is an investment of time and money… and I will add, a WISE INVESTMENT indeed. I say “wise” because the consequences of a misfiled tax return, an incorrect tax return or a late/penalized tax return are aweful in the short and long term. Do not put yourself through the ongoing pain and agony of dealing with angry IRS agents and uncompromising auditors who’ll take you to the cleaners if you’re even the least bit sloppy. Oh, you say you didn’t mean to make that mistake? Oh, you say you didn’t know you had to do this or that? Tough beans. Tax auditors eat these kinds of excuses up and spit out big red marks with lots of zeros on a line which says: YOU OWE. Unless you are Bill Gates, these are not dollar figures you like to see in the red column. No one wants to pay unexpected bills … especially back taxes!

But I’ll tell you a bigger problem.

Unclaimed refund money taxpayers never receive because they had no idea they were entitled to a certain deduction or they never filled out a particular form that automatically got them more money or ……… (the list is endless!) The worst part is YOU don’t have extra money in your bank account or even in your pocket right now because you didn’t get a tax preparer who knew what they were doing to help you file in recent years. Statistically speaking, you could be out as much as $1,300.00 in back refund money because you choose to file by yourself. (Ouch!) I wouldn’t take that chance. I’d choose a quality tax professional this year and ask to let them review your previous 3 years of tax returns at the same time. You might have some “buried treasure” lying around in your files and never know it. Wouldn’t that be a scream! (Caribbean Vacation, here we come….)

Take Action Now …Before It’s To Late!

The clock is ticking. Most taxpayers procrastinate. I hope you are not one of them…Best Wishes and Happy Filing!

The Time is Now To Lower Your Tax Bill

From moneycnn.com:


Next April may feel light-years away, but December will be here before you know it -- and many of the benefits you can reap on tax day require you to act well before the end of the year.
"The further ahead you start your tax planning, the more strategies you will have to save money," says Indianapolis accountant Kevin Aaron. The early-bird tactics that follow can together keep thousands of bucks in your pocket. 


Read more by clicking on the above link

You can't make this stuff up

H & R Block won't honor their guarantee. 

From the consumerist web site:

Bambi has been getting her taxes done by H&R Block for decades with no problem. But when a recent audit turned up a small error that required Bambi pay $725 in additional taxes, folks at the tax-preparation service seemed to go out of its way, including telling her complete falsehoods about why her claim was being denied, to not make good on its guarantee to reimburse her for the $725.

Read more by clicking the above link.

IRS Hits Homers, Too!

New York Yankees shortstop Derek Jeter became the 28th major leaguer — and only the first Yankee — to achieve 3,000 career hits. Jeter's third inning solo home run to left field wound up in the hands of a 23-year-old fan named Christian Lopez. Souvenier baseballs are big business, so team officials immediately whisked Lopez out of the stands, escorted him into the president's office, and asked him what he planned to do with his windfall. (The fan who caught Barry Bonds's 715th home run ball sold it on Ebay for $220,100. And Mark McGwire's record-breaking 70th home run ball sold for $3 million in 2006. Nice timing, too — in 2010, McGwire admitted using steroids while he played, and that ball's estimated value dropped faster than a pop fly!)
Lopez showed a bit of class that some would say is surprising from a Yankees fan. He passed on the chance to auction the ball, which some experts estimate would have fetched as much as $250,000. Then he told reporters he thought the ball belonged to Jeter and gave it back to the legendary slugger. But he still walked off with some lovely parting gifts, including three Jeter-autographed balls (worth about $600 each), three autographed bats ($900 each), and two autographed jerseys (another $1,000 each). The Bronx Bombers also gave him four tickets to every remaining home game this season. In fact, for the game after Lopez's lucky grab, they gave him four front-row 'Legends' seats, which sell for up to a whopping $1,358.90 each. Quite a haul!
Oh, and you know what else he's likely to catch? That's right . . . a tax bill from the IRS! And those opponents won't be happy with jerseys or tickets, even if the Yanks make the Series. They just want cash, thank you very much.
Catching collectible baseballs presents all sorts of tricky tax questions that most fans won't think of when they suit up for a big game:

• When does the lucky fan who catches the ball fan 'recognize' the income? Now, when he catches it? Or someday down the road, when he sells it?

If tax is due immediately, before the fan sells, how does he determine what it's worth?

If the proceeds qualify as capital gain, taxed at the special 28% rate for collectibles, what will the fan's 'cost basis' be? Zero? The price of the ticket to the game? The price of his season-ticket package?

And what if the lucky fan gives the ball back to the hitter, like Lopez did with Jeter? Back in 1998, just before Mark McGwire beat Babe Ruth's single-season record, a reporter asked an IRS spokesman what would happen if the fan who caught that ball handed it back to McGwire. The spokesman replied that the fan might actually owe gift tax — and sparked howls of protest! Then-Commissioner Charles Rossoti quickly changed course, confessing that the Tax Code could be as hard to understand as the Infield Fly Rule.
Tax experts predict Lopez won't owe tax on the value of the ball he caught, but will owe it on the value of his memorabilia and tickets. What do you think? Is that fair? Or should the IRS 'intentionally walk' the fans who catch souvenir balls and let them enjoy a little tax-free history?

Top of the head response, which these instances induce, would be to discuss the earned image of the IRS!
How could you possibly get a worse image than this scenario ? The average person (like me) finds the IRS to more than deserve their reputation. To make matters worse, the IRS has some government bean counter contacting individuals or the Yankees and reading them these types of rules.
This gives sportswriters something to do. For example, the late Bill Murray (I forget his first name) would do a column like options for foul balls, home runs, etc. in tricky situations. The options would be something like:

1. Dodge the ball and let someone else pay the IRS. The fan would avoid trauma from being mauled for the ball and go home safely and without IRS worry.
2. Let the ball hit them and slump to the ground. This would delay all parties, since the fan has medical options.
3. Catch the ball and quickly put a ski mask on and exit as soon as possible. This leads to all sorts of options like involving the New Your Mafia Family, etc.
4. Do what any Americal would do . . . catch the ball and go kick ass with the IRS pinhead.

Have a nice day,