Business
IRS: We're watching doctors
NEWS IN BRIEF — Posted March 5, 2007
The Internal Revenue Service is warning physicians to keep a careful eye on how they fill out their personal taxes -- or a careful eye on the person filling out taxes for them.
The IRS reported that the number of criminal investigations of taxpayers in the medical industry, which includes physicians, dentists and chiropractors, increased to 68 in 2006 from 44 in 2005. Meanwhile, the number of audits for those earning $100,000 or more was at 221,000 in 2005, the highest number in the past 10 years.
IRS spokesman Eric Smith said audit teams focus on areas that have traditionally shown problems -- including Schedule C, a form often filled out by self-employed physicians. In 2002, the IRS implemented the Unreported Income Discriminate Index Function, which scores a return's likelihood that income is underreported by comparing return data against other filers with similar demographics. For example, IRS investigators and experts said asset-protection plans sold to physicians are often scrutinized.
Keith Hall, national tax adviser for the Dallas-based National Assn. for the Self-Employed, said physicians need not fear taking deductions. But he said doctors should be diligent about saving receipts and records, even, for example, writing on the back of a restaurant receipt who was at dinner and what business was discussed.
Note: This item originally appeared at http://www.ama-assn.org/amednews/2007/03/05/bibf0305.htm.
