Bank Deposits Analysis

If a taxpayer fails to file a return, there are several things IRS can do to get around that. If the taxpayer is employed, it gathers the employers W-2s and 1099s and utilizes them to construct what a return would look like. Say, however, the taxpayer is self-employed --- maybe he operates a bookstore or some other retail outlet. What does the IRS do then? Well, if the taxpayer kept checking and savings accounts, IRS might utilize those accounts to reconstruct his income from the deposits in them.

A good example of IRS doing that is a case issued by the United States Tax Court today, the case of BLAKE HYUN SEO. You can view the case at http://www.ustaxcourt.gov/InOpTodays/Seo.TCM.WPD.pdf . I'm not certain how long that link will work, though, because the opinion will only be a "today's opinion" today. However, you can do a search any time using his name on the United States Tax Court webpage and find the case.