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Sounds kind of dirty, right? Actually, it's because of a clean visual that technical analysts use this term. Technical analysts like charts (hence their nickname of "chartists"), and they like to give certain patterns they see neat little names.
Such is the case with the double bottom, which looks on a chart like, well, a double bottom. Think of three mountains (on a chart reflecting a rise in values) separated by two valleys (representing dips in value). The troughs of the valleys, and the size of the first two peaks, are generally the same, so the chart looks like the letter 'W.' The appearance of those two valleys represents a double bottom.
So what? Well, if you're one of those folks who believes in the power of the charts, seeing a double bottom suggests a long-term trend is about to reverse. So, if a stock chart shows shares falling for several months, then seeing a double bottom, chances are good (according to the chartists) that the shares will rise. And vice versa.
But, beware: charts can be a great tool, but they're more art than science. Use any charts with caution.
Home / Personal Finance / Financial Planning / Tax
Friday, April 25, 2008
Your Money Matters
The Letter Every Taxpayer Dreads
Gail Buckner
FOXBusiness
Dear Friends-
Your tax return just got selected for audit?!
Try not to take it personally. Ian Comisky,
a Philadelphia tax attorney who once prosecuted tax fraud cases for the government, says the Internal Revenue Service is in
the process of updating the sophisticated computer program it uses to sniff out potential fraud. If you’re lucky, the computer
simply selected your return at random because you happen to be married with three kids and the IRS wants to know what deductions
are typical for taxpayers with this profile.
This is not to suggest that an audit letter should be taken lightly.
It’s certainly more serious than a “correction notice,” which I wrote about last week.
In a so-called “audit notice” the IRS is informing you it is questioning something about your return and wants additional
information. The letter should specify exactly what documentation you need to provide and also include a statement about the
rights you have as a taxpayer.
If you’re comfortable your return is accurate- i.e. you weren’t too “creative” with
the math--either you or the individual who prepared your tax return can respond. However, be very careful to provide exactly
what the IRS asks for: Don’t volunteer anything more or you could open the proverbial
can-of-worms. Comisky calls this an “eggshell audit.” In his words, it should be “handled with care because if it breaks,
it can lead to criminal charges.”
During the government’s 2007 fiscal year, the IRS hit nearly 3.8 million
taxpayers (individuals and businesses) with levies for additional taxes and penalties. It filed almost 700,000 liens and more
than 4,200 cases were turned over to the Justice Department for criminal investigation. The average sentence handed down for
tax and tax-related cases was 22 months.
Small Business owners are favorite IRS audit target, and for good reason:
They have more opportunities to “massage” their declared income and expenses. Many small business owners deal in cash, which
is easy to hide. Honestly now, did you get a little conservative when you reported that your landscaping business only earned
$60,000? That $35,000 mortgage deduction you claimed was the tip-off. The IRS computer spit out your return faster than a
Sydney Crosby slap shot.
However, the IRS doesn’t just rely on technology to point out potential tax cheats. “A lot
of audits start the old-fashioned way,” says Comisky. “Somebody turns you in. Maybe you fired them. Or the girlfriend turns
the boyfriend in. Or the mistress turns in the husband.”
In addition to an audit notice, there are several
other ways you could learn the IRS has “issues” with your return. In escalating levels of seriousness, these include:
- An IRS agent makes an unexpected appearance at your front door and asks to come in to “just discuss a few things.”
According to Comisky, who co-authored Tax Fraud and Evasion, “The first thing they do is try to get an interview when you don’t have counsel with you usually at night or in the morning.” Don’t be fooled by the agent’s casual tone. Comisky says the agent has generally spent months preparing for this friendly get-together and you’re probably facing a criminal investigation.
- You receive a phone call or letter from the U.S. Attorney’s
Office.
This means the IRS thinks its case against you is so strong it’s been sent to the grand jury. The
next communication you receive may be a subpoena or “target letter.”
- Your bank, brokerage, and IRA accounts
are frozen.
This is known as a “jeopardy assessment.” The IRS simply starts seizing assets.
“You can go to court,” says Comisky, “but they grab the stuff first.”
I hope you never find yourself in any
of the above situations. In reality, however, the thought of getting away with paying less in taxes is so alluring it can
make very smart people, who can afford very expensive and presumably sophisticated accountants, push the envelope.
Out of your league? Then I invite you to peruse the list of tax court cases involving “small fish” like you and me. There
are numerous examples of “regular folks” falling prey to some hair-brained scheme that promises to save them a few hundred
bucks. In the end, it costs them far more than in taxes, penalties, and legal fees. Often, the individual who promoted the
scheme does jail time.
Although we’ve all heard it numerous times, the following is worth repeating: If it sounds too good to be true, it probably is.
Gail’s corollary: If you decide
to go for it anyway, line up a good tax attorney. Oh, and buy a half dozen bottles of Maalox. Just in case.
Hope
this helps,
Gail
If you have a question for Gail Buckner and the Your
$ Matters column, send them to:
yourmoneymatters@gmail.com, along with your name and phone number.
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