Tax Attorney Roni Deutch Analyzes Proposed Tax Laws in New Featured Blog

North Highlands, CA (PRWEB) May 25, 2007 -- In a new featured blog entry, tax attorney Roni Deutch analyzes a budget proposal that would require numerous Internet businesses to collect personal data from their users including social security numbers.

Tax attorney Roni Deutch launched her blog www.RonisBlog.com in November 2006, where she posts daily blog entries on both tax topics and other topics of interest including baseball, surfing, and Hawaii. In her first featured blog entry Roni addresses a new proposal included in the President's 2008 budget as a way to reduce the gap between what taxpayers should pay and what they do pay. Below is snippet from the blog, to read the full entry you can visit Roni's Blog.

The IRS is backing the U.S. Treasury Department's efforts to include a proposal in the 2008 budget requiring many Internet businesses to collect personal data from their users. The proposal is part of an effort to close the ever-present gap between what Americans should pay in income taxes and what they actually do. This amounts to an estimated $300 billion per year. However, collecting the targeted data is going to be a difficult task for the site-operators and small business owners. Furthermore, the process will create security issues for millions of users in a time when online identity theft is rampant.

In 2001, the "tax gap" - difference between what the IRS should collect in taxes and what it actually does collect - was over $345 billion. Underreporting on individual income tax returns accounted for $197 billion of the gap. Underreporting on business tax returns accounted for $88 billion. This left the IRS collecting only about 85% of owed taxes. Since taking over the White House, the Bush Administration has seen this gap as an opportunity to increase the federal government's revenue without raising taxes.

At the behest of the Bush Administration, the IRS has implemented a variety of new enforcement and collections measures to reduce the gap over the last five years. The efforts have paid-off: the IRS increased its enforcement revenues by 44 percent from $33.8 billion in 2001 to $43.1 billion in 2004 to $48.7 billion in 2006. "Clearly, more work needs to be done by the IRS to improve service and enforcement," states IRS Commissioner Mark W. Everson. "But we are clearly making progress, and these numbers underscore that point."

Now, more enforcement and collection measures are on the table. As part of its ongoing campaign to close the tax gap, the Bush administration has allocated over $400 million of next year's budget for these new measures. A main goal of the proposed measures is to increase the taxes paid by many sole-proprietors and small businesses. Currently, sole proprietors and small businesses report most of their income to the IRS through an "honor" system. The IRS claims some of these small businesses report only half of their total income, leaving millions of dollars in unpaid taxes. One specific target of the proposal is to collect taxes from income generated through online auction sites such as eBay and Ubid.com. Recent studies show over 700,000 Americans making their sole income from auction sites like eBay, and without any formal method to monitor these sales the government is assuming most of this income is being underreported.

Specifically, the new proposal would force auction sites acting as online brokers to file income statements for all customers using their sites to conduct 100 or more transactions or generating more than $5,000.00 per year in income. In order to comply, the sites would need to collect personal data from their users including name, address, and taxpayer identification or social security numbers (SSNs). Essentially, the IRS is forcing the collection of the data under the threat of liability and further legal consequence.

Typically, people generating income form auction sites are small businesses and self-employed individuals who do not have taxpayer identification numbers. Therefore, they will have to provide the sites with their SSNs, which will be stored and maintained by the individual sites in massive data banks of personal information. Although the IRS claims the sites will only need to collect data from high volume users, it is very likely that the sites will have to collect data from all of their users.

Having the proposed amount of personal data exchanged over the Internet could prove to be very problematic. Illegal phishing scams already target sites collecting personal data. Phishing is already problematic for eBay, where scammers create fake re-direct sites that retrieve users' personal data.

With so many issues of identity theft online, many people are going to be reluctant to provide their SSNs to sites like eBay. According to the Center for Democracy and Technology, "forcing businesses to collect SSNs could have a chilling effect on legitimate e-commerce if consumers balk at providing their SSNs for simple transactions -- something most people are not accustomed to doing."

You can finish reading the featured entry by visiting Roni'sBlog.com.

About Roni Lynn Deutch

Roni Deutch is the founder and owner of Roni Lynn Deutch, A Professional Tax Corporation, a tax resolution law firm, and Roni Deutch Tax Center. Her law firm has been helping clients find solutions to their back tax liabilities for over sixteen years. To learn more about tax attorney Roni Deutch you can visit Roni's Blog or YouTube Channel.

Contact:
Mathew Guiver, Search Engine Marketing Analyst
Roni Lynn Deutch, A Professional Tax Corporation
877-232-8477 Ext. 1914
http://www.ronideutch.com

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