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Timber sales must be reported to IRSNebraska With the April 17 tax deadline fast approaching, landowners and others who sell timber must be aware of the federal taxes they owe on their timber sales, a University of Nebraska-Lincoln forester said. Not reporting income, including income from the sale of timber, is a crime, said Dennis Adams, Nebraska Forest Service forester in the university's Institute of Agriculture and Natural Resources. "Almost everyone who has income must file a federal income tax return with the IRS and pay their fair share of taxes," Adams said. "Timber sales are no different, but the law is clear and ignorance of the law is no excuse." If the IRS chooses, in addition to back taxes, penalties and interest, a tax abuser could be subject to criminal penalties, he said. Adams said the IRS knows from studies that a significant percentage of landowners who sell timber do not report the income. This may be because some landowners assume that since they don't get a Form 1099 from the timber buyer, the IRS can't track the timber income. "This is true in terms of the automatic computer matching of Form 1099 data with a taxpayer identification number, but there are other ways for the IRS to get this information," Adams said. The IRS has been known to contact sawmills and other timber buyers for their sources of timber and/or logs, Adams said. IRS agents can then check the tax returns of timber sellers to see if their timber sale income was reported. "This is an expensive and time-consuming process for the IRS, but they wouldn't do it if non-reporting of timber sale income wasn't a significant problem," Adams said. "A good mind-set at income tax filing time is to assume you will be audited. Take advantage of the tax benefits for timber sales, but always report timber income on your federal income tax return." 0 None None Date: 4/26/07
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