23 Dec NetWorth Services Assists the IRS in Determining Tax Gap from Schedule D
Phoenix, Arizona – April 4, 2005 – The Internal Revenue Service has released preliminary results from the 2001 National Research Program’s (NRP) random audit of 46,000 tax payers, in which NetBasis (Nb2) was used as a verification tool for cost basis information. With the ability to accurately verify reported capital gains and losses on the Schedule D, the IRS identified an unreported capital gains tax gap of $6 billion to $9 billion per year and $50 billion or so in non-business income such as dividends and capital gains that people fail to report. The tax gap is the difference between what taxpayers should pay and what they actually pay on a timely basis.
“The results of the Tax Gap Report definitely exceeded our conservative estimates of lost revenue attributed to erroneous or unreported capital gains, said Nico R. Willis, CEO of NetWorth Services. “This report illustrates that the problem is greater than we originally anticipated. We are pleased to be able to provide the IRS with a solution to this problem.”
IRS Commissioner Mark W. Everson announced that an additional analysis of the tax gap should be completed by the year-end, which may present a tax gap that further falls outside of the reported range. The next stage of the NRP is to finish the data analysis, refine the tax gap data and use that data to update the statistical tools used to select individual returns for audit, an important step in strengthening compliance with the tax system.
Nb2 is a simple, internet-based system that accomplishes in minutes what formerly seemed impossible. With as little information as the year of purchase, Nb2 quickly and easily filters through its massive database of financial information and within seconds, reaches back into time and recreates a complete history of that investment and then delivers the accurate adjusted cost basis.
Nb2 is the only product on the market that reconstructs the historical cost basis, and provides the security pricing. Furthermore, with the IRS and accounting firms both using the Nb2 system, NetWorth Services is rapidly moving towards creating an industry standard. When we designed this system, our goal was to level the playing field between the tax payer and the government,” continued Nico Willis. “A system, such as Nb2, contributes to building a level of trust between tax return reporting and review through an impartial system where both parties arrive at the same numbers; giving a virtual stamp of approval to any data submitted.”