Senator
Thinks s/he gets paid by the post
The link was EITC scam related. But the second part, regarding your wacky proposed hybrid accrual accounting that isn't even proper accrual accounting was not.
I seem to also recall the IRS objecting to overstating income to pay self employment tax to qualify for SS benefits.
We are getting off the OPs original question, but accrual accounting is just that. Recognizing revenue as goods or services are provided, not when the revenue is received. It is not limited to any particular business, and not limited to any particular sized business. An individual can do it.
If the revenue is never actually received, or results in a return for the full or partial amount, I am not sure what happens to the income/deductions declared in previous years. I suspect it is a loss.
Whether you are your own best customer, or someone else is your best customer, it really doesn't matter. Large businesses do it all the time, much of the inversions that have been done relate to that. Company A (in the USA) pays company B (in Ireland) a license fee. Company B is in a low tax area, like Ireland. Company A has very little, or no profit, due to the licensing fee. Both Company A and B are subsidiaries of a larger umbrella.
You have to look at the harm done. If the Government takes in more revenue, it will not be challenged. If you get a subsided ACA policy as a result of extra income, there are tax implications and the IRS will certainly care. Especially when the tax credits are more than the tax. Just like with the EITC.
Income. The final rule also addresses verification of other premium tax credit eligibility information. An applicant’s claimed income must be checked against tax and Social Security records. If an applicant claims that his or her income is greater than that shown by this data, and thus tax credits will be smaller than they otherwise would have been, the applicant’s attestation will be accepted. If available data indicates that the applicant’s income is in excess of his or her claimed income by a “significant amount” the attestation must be verified, for example by requesting documentation.
http://healthaffairs.org/blog/2013/...eligibility-determinations-part-1/#more-32799
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