Service makes use of educational outreach.

• Author: Gribens, Bruce K.
• Position: IRS - Brief Article

The IRS is utilizing nontraditional means to ensure that taxpayers are voluntarily complying with the tax laws. These nontraditional means result in less burden to taxpayers, as well as a more efficient use of the Service's resources. The Market Segment Specialization Program is utilizing an educational outreach program to ensure full compliance with the wholesale industry's use of accrual method accounting.

The "Educational Outreach Initiative `Wholesalers'" was developed by a joint venture between the IRS (Examination, Chief Counsel and Public Affairs) and the stakeholders (taxpayers, practitioners/local CPA societies and the National Association of Wholesale Distributors). The joint venture designed this initiative to replace the traditional examination of returns to identify and correct taxpayers that incorrectly use the cash versus accrual method of accounting.

Using management activity code filters, the initiative first identifies wholesalers that were on the cash method of accounting and maintained no inventory. Nationwide, the Service identified over 14,500 wholesalers that individually had gross receipts over $500,000 and used the cash method of accounting. Rather than examine all of these taxpayers at a considerable cost to the government and tremendous burden to the taxpayer, they were each sent a letter...