Using K-1 Data for Improving Tax Compliance

A Treasury Inspector General for Tax Administration’s report tells the IRS to do a better job information on Schedules K-1 to identify taxpayers who aren’t tax compliant. The report found that of approximately 3,000 pass-through returns with K-1s, the IRS failed to identify about 4,000 non-filers who received $25,000 or more of K-1 income. As a result of the report, expect the IRS to step up its compliance efforts in this area.