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Archive for IRS

Treasury General For Tax Administration: Ongoing Threat Of IRS Impersonation Scams

Tax Scams

WASHINGTON – J. Russell George, the Treasury Inspector General for Tax Administration, announced the release of new public service announcements (PSAs) to educate taxpayers about the continuing threat of Internal Revenue Service (IRS) impersonation scams.

The English and Spanish-language PSAs are available on TIGTA’s YouTube Channel.

“IRS impersonation scams continue to plague Americans and have claimed victims in every State,” George said. “TIGTA’s new public service announcements share advice on how to recognize these scams. If you receive a suspicious phone call from someone claiming to be from the IRS, just hang up.”

Scammers undermine Federal tax administration by impersonating IRS employees in an effort to obtain personally identifiable information (PII) from unsuspecting taxpayers or to steal their money. Such impersonators may claim to be IRS employees on the telephone or may misuse IRS logos, seals, or symbols to create official-looking letters and e-mails.

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IRS Instructions: Victims Of Tax Related Identity Theft

IRS On Identity Theft

The Internal Revenue Service today reminded all taxpayers – particularly those who are identity theft victims – of an important step they should take to protect themselves from tax fraud.

Some identity thieves use taxpayers’ information to file fraudulent tax returns. By requesting Identity Protection PINs from the Get an IP PIN tool on IRS.gov, taxpayers can prevent thieves from claiming tax refunds in their names.

Identity Protection PINs And How To Get One

An IP PIN is a six-digit number the IRS assigns to an individual to help prevent the misuse of their Social Security number or Individual Taxpayer Identification Number (ITIN) on federal income tax returns. The IP PIN protects the taxpayer’s account, even if they’re no longer required to file a tax return, by rejecting any e-filed return without the taxpayer’s IP PIN

Taxpayers should request an IP PIN:

  • If they want to protect their SSN or ITIN with the IRS,
  • If they want to protect their dependent’s SSN or ITIN with the IRS,
  • If they think their SSN, ITIN or personal information was exposed by theft or fraudulent acts or
  • If they suspect or confirm they’re a victim of identity theft.

Taxpayers can go to IRS.gov/getanippin to complete a thorough authentication check. Once authentication is complete, an IP PIN will be provided online immediately. A new IP PIN is generated every year for added security. Once an individual is enrolled in the IP PIN program, there’s no way to opt-out.

The IRS may automatically assign an IP PIN if the IRS determines the taxpayer’s a victim of tax-related identity theft. The taxpayer will receive a notification confirming the tax-related ID theft incident along with an assigned IP PIN for future tax-return filings.

Taxpayers will either receive a notice with their new IP PIN every year in early January for the next filing season or they must retrieve their IP PIN by going to IRS.gov.

Tax-related Identity Theft And How To Handle It

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The IRS And Nominee Liability

The IRS And Nominee Liability

Nominee Liability

Under the Internal Revenue Code, the IRS can satisfy a tax deficiency by imposing a lien on any “property” or “rights to property” belonging to the taxpayer.  The statutory language is broad and reaches virtually every interest in property that a taxpayer might have, with limited exceptions.  In fact, the IRS’s legal ability to reach “property” and “rights to property” can include not only property and rights to property owned by the taxpayer in the taxpayer’s name, but also property held by a third party if the third party is holding the property as a nominee of the delinquent taxpayer.

What is a nominee?

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Spotlighting IRS Customer Service Challenges

Spotlighting IRS Customer Service Challenges

The United States Senate Committee on Finance held a hearing on February 17, 2022 tax professionals and taxpayers should pay attention to right now. During this hearing they were “Spotlighting IRS Customer Service Challenges”. You can watch the hearing at this link. However, it is recommended you start by viewing the statements of the following individuals:

Senate Member Statements:

Mike Crapo Statement (R-ID)

Ron Wyden Statement (D-OR)

Witness Statements:

Erin Collins, National Taxpayer Advocate, IRS Testimony

Jessica Lucas-Judy, Director, Strategic Issues, US Gov Accountability

Jan Lewis, Chair, Tax Executive Committee, AICPA

You will find it very valuable reading these statements to understand what is going on behind the scenes, yet right out in the open during this hearing and testimony. Being informed is the best lesson.

IRS Suspends Mailing Of Additional Letters

IRS Suspends Letters

WASHINGTON – As part of ongoing efforts to provide additional help for people during this period, the IRS announced the suspension of more than a dozen additional letters, including the mailing of automated collection notices normally issued when a taxpayer owes additional tax, and the IRS has no record of a taxpayer filing a tax return.

These mailings include balance due notices and unfiled tax return notices. The IRS entered this filing season with several million original and amended returns filed by individuals and businesses that have not been processed due to challenges of the historic pandemic and is taking this step to help avoid confusion for taxpayers and tax professionals.

“IRS employees are committed to doing everything possible with our limited resources to help people during this period,” said IRS Commissioner Chuck Rettig. “We are working hard, long hours pushing creative paths forward in an effort to be part of the solution, rather than the problem. Our employees continue to expend every effort to balance a confluence of multiple, unprecedented demands − including successfully starting the filing season, working our inventory of unprocessed tax returns as well as looking for additional ways to minimize burden for taxpayers, tax professionals and businesses.

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IRS Issues Guidance Regarding The Retroactive Termination Of The Employee Retention Credit

IRS Issues Guidance Regarding The Retroactive Termination Of The Employee Retention Credit

The Internal Revenue Service today issued guidance for employers regarding the retroactive termination of the Employee Retention Credit. The Infrastructure Investment and Jobs Act, which was enacted on Nov. 15, 2021, amended the law so that the Employee Retention Credit  applies only to wages paid before October 1, 2021, unless the employer is a recovery startup business.

Notice 2021-65 applies to employers that paid wages after September 30, 2021, and received an advance payment of the Employee Retention Credit for those wages or reduced employment tax deposits in anticipation of the credit for the fourth quarter of 2021, but are now ineligible for the credit due to the change in the law. The notice also provides guidance regarding how the rules apply to recovery startup businesses during the fourth quarter of 2021.

Employers Who Received Advance Payments
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Giving Tuesday: Important Charitable Giving Reminders For Taxpayers

Giving Tuesday: Important Charitable Giving Reminders For Taxpayers

Giving Tuesday is the kickoff of the season of charitable giving. The IRS encourages taxpayers to research charities before donating and to familiarize themselves with the expanded tax benefits that may come with giving to causes that mean something to them.

Taxpayers may be able to deduct donations to tax-exempt organizations on their tax return. As people are deciding where to make their donations, the IRS has a tool that may help. Tax Exempt Organization Search on IRS.gov is a tool that allows users to search for charities. TEOS provides information about an organization’s federal tax status and filings.

Here are some facts about the Tax Exempt Organization Search tool:

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Pre-Marital Agreements And The IRS

Pre-Marital Agreements And The IRS

It is certainly not uncommon for one taxpayer with significant federal tax debts to want to marry another taxpayer without any tax debts at all.  In these instances, both taxpayers may naturally desire to enter into a pre-marital agreement to ensure that their respective assets and debts (including federal tax debts) are kept separate.  This is particularly so in so-called “community property states” where the presumption is that each taxpayer is deemed to have rights to one-half of the other taxpayer’s community property income and assets.

Taxpayers in these circumstances should understand that the IRS will not always respect a pre-marital agreement.  Rather, the IRS will, in many cases, carefully scrutinize the agreement itself and the surrounding circumstances to determine whether it can pierce through the agreement and reach the liable spouse’s community property share of assets.  Accordingly, taxpayers should, where warranted, consult with a tax professional to determine whether the pre-marital agreement complies with federal tax law and IRS guidance.

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Independent Contractor (Self-Employed) Or Employee?

Independent Contractor (Self-Employed) Or Employee?

It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors.

Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.

Select the Scenario that Applies to You:

  • I am an independent contractor or in business for myself
    If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed. For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Tax Center.
  • I hire or contract with individuals to provide services to my business
    If you are a business owner hiring or contracting with other individuals to provide services, you must determine whether the individuals providing services are employees or independent contractors. Follow the rest of this page to find out more about this topic and what your responsibilities are.

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New IRS $67 User Fee Applies To Estate Tax Closing Letters

Estate Tax Closing Letter

The Internal Revenue Service announced that starting Oct. 28, a new $67 user fee will apply to any estate that requests a closing letter for its federal estate tax return.

The new user fee was authorized under final regulations, TD 9957, available today in the Federal Register. Closing letter requests must be made using Pay.gov. The IRS will provide further procedural details before the user fee goes into effect.

By law, federal agencies are required to charge a user fee to cover the cost of providing certain services to the public that confer a special benefit to the recipient. Moreover, agencies must review these fees every two years to determine whether they are recovering the cost of these services.

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What Is IRS Notice Of Deficiency?

What Is IRS Notice Of Deficiency?

Ordinarily, taxpayers file their income tax returns each year with the IRS and hear nothing more.  Rather, the Internal Revenue Service (“IRS”) simply processes the tax return, assesses the reported amount of tax due, and accepts and credits the taxpayer’s payment against the reported tax amount.  In this manner, life moves on until the same process is repeated again the next year.

But, there are times in which the IRS disagrees with the amount of tax reported on a taxpayer’s return.  In these instances, the IRS must utilize so-called “deficiency procedures” to communicate to the taxpayer the IRS’ belief that adjustments should be made to the return.  These deficiency procedures provide taxpayers with significant procedural rights to contest the IRS’ determinations.  This article discusses the deficiency procedures including the Notice of Deficiency (“NOD”) the IRS must issue prior to making an assessment of federal tax.  This article also discusses the taxpayer’s right to challenge the IRS’ determinations in the NOD through filing a petition with the United States Tax Court (“Tax Court”).

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IRS Issues Summons Requiring Couriers And Financial Institutions To Produce Information About U.S. Taxpayers

U.S. Department Of Justice

Audrey Strauss, the United States Attorney for the Southern District of New York, David A. Hubbert, Acting Assistant Attorney General for the Justice Department’s Tax Division, and Charles P. Rettig, Commissioner of the Internal Revenue Service (“IRS”), announced that U.S. District Judge Gregory H. Woods entered an order yesterday authorizing the IRS to issue summonses requiring multiple couriers and financial institutions to produce information about U.S. taxpayers who may have used the services of Panama Offshore Legal Services (“POLS”) and its associates (together, the “POLS Group”) to evade federal income taxes.  Specifically, the IRS summonses seek to trace courier deliveries and electronic fund transfers between the POLS Group and its clients, in order to identify the POLS Group’s U.S. taxpayer clients who have used the POLS Group’s services to create or control foreign assets and entities to avoid compliance with their U.S. tax obligations.

Manhattan U.S. Attorney Audrey Strauss said:  “This action underscores our Office’s commitment to hold accountable those who use offshore service providers to avoid U.S. taxes.  In issuing these John Doe summonses, we continue our joint efforts with the IRS to investigate tax evaders who use foreign financial accounts and sham foreign entities to hide their assets.”

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