As anyone who has ever been audited knows, the IRS isn’t messing around when it comes to the tax code. They take violations very seriously, and if you don’t pay the right amount or you report your taxes incorrectly, they’ll not only force you to make back payments but they also may fine you. In their eyes, there’s no excuse for not paying the right amount each year because the tax code is available for anyone to read. They assume that if you aren’t sure what amount you should be paying or what income you need to report that you’ll hire an accountant who can help you figure it out. If you don’t do this, that’s on you. At least that’s their view on things, and like it or not, they’re the ones enforcing the laws and regulations that are on the books. If you don’t like the laws, that’s something you’ll have to take up with Congress.
The IRS takes every aspect of the tax code seriously, so naturally that also includes arbitrage rebate calculation. Arbitrage rebate calculation is the practice by which an individual or business calculates what their arbitrage rebate should be for the time period they’re looking at. An arbitrage rebate isn’t actually a rebate at all, but instead is a payment that an individual or business makes to the IRS. This payment is meant to cover their liability for income that they made through arbitrage.
If you’re not familiar with arbitrage in this kind of situation, it’s essentially the income that an individual makes by taking the profits from a tax-advantaged bond and putting them into higher-risk but also higher-yielding investments. A person doing this is essentially taking advantage of the tax benefits of bond purchases in order to try to make more money with riskier but potentially higher-earning investments. In an effort to dissuade people from doing this, the IRS has many laws and regulations governing this type of investing which essentially state that any profit made in this way has to be claimed and paid back to the IRS.
As you probably already know, the IRS takes calculating the arbitrage rebate very seriously. If a person under reports what their arbitrage rebate should be, then the IRS will not only make them pay the difference, but they might also hit the person with some sort of fine. This is why it’s so important for anyone doing this type of investing to hire a tax firm like Arbitrage Compliance Specialists that specializes in this area of tax law. Firms like ACS have a strong understanding of the tax code regarding this type of investing, and that knowledge allows them to accurately calculate arbitrage rebates for their clients. If you engage in this kind of investing and you want to be sure that you’re paying the IRS what they’re owed, then you need to hire a specialty tax firm like ACS to calculate your arbitrage rebate for you. You can learn more about their firm at their website, www.RebateByACS.com.