Overview of the IRS Enforcement Program Involving IRA Issues

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., in Woodbury, New York
• Pages: 1-2

1

OVERVIEW OF THE

IRS ENFORCEMENT

PROGRAM INVOLVING

IRA ISSUES

According to the Treasury Inspector General for Tax Administration,

an estimated 255,000 individuals did not take requ ired minimum dis-

tributions for the tax years 2006 and 2007. In addition, an estimated

295,000 individuals improperly made excess contributions for the tax

years 2006 and 2007. See Treasury Inspector General for Tax Admin-

istration Report dated March 29, 2010, reference number 2010-10-043.

The IRS is developing a compliance initiative whereby the IRS

Wage and Investment Division and the IRS Tax Exempt Government

Entities Division will develop a strategy to reduce this noncompliance

problem.

In this initiative the IRS pla ns to increase enforcement efforts as

well as offer additional gu idance to IRA account holders. The IRS may

also embark on some ty pe of educational initiat ive as well, but that may

be limited based on IRS resou rces.

The IRS used information from Forms 5498 and Forms 1099-R in

identifying t axpayers who violated the excess contribution rules and the

required mini mum distribution ru les.

Many taxpayers make contributions to IR A accounts that exceed

the maximum amount permitted under the law. This, of course, resu lts

in an excess contribution.

In 2013, the maximum contribution to a traditional IRA is $5,500

for an individual who is under age 50 and $6,500 if the individual is age

50 and older. However, an individual age 70½ or older cannot make a

contribution to a traditional I RA. The age 70½ and older rule does not

apply to a Roth IRA.

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