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The National Taxpayer Advocate Responds To Private Debt Collectors’ Contentions

Nina Olson, IRS Use Of Debt Collectors

Last week, I returned from vacation to read a press release from a newly formed organization consisting of private debt collection (PDC) agencies working IRS accounts. “Nina Olsen [sic] has consistently made false and misleading claims about the IRS and its Private Debt Collection Program to advance her own political agenda,” the organization’s spokesperson asserted.

While I don’t often take the time to respond to ad personam attacks, this one deals with a core IRS program, so I think it deserves a response – particularly given some of the questionable claims it made.

It’s no secret that I believe the collection of taxes is a core governmental function that should not be outsourced to for-profit businesses that are paid on commission. I have written about the use of private collection agencies (PCAs) repeatedly in my annual reports to Congress and elsewhere. But it is worth taking a moment to summarize the basis of my concerns. While others have investigated the practices used by private collection agencies, my focus has been on IRS policies and IRS administration of the statutory program.

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Understanding IRS Notices: A Guide For Tax Audits

This Guide For Tax Audits was prepared by Tax Lawyer Venar Ayar. The Guide covers the many notices that the Internal Revenue Service sends to individual taxpayers regarding tax audits. This is an excellent guide for tax professionals and taxpayers alike and we thank Ayar Venar for compiling this information and reference guide for our readers.

Please be advised that all tax audits should be handled by an experienced tax professional. Please refer to the guide below:

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How Long Should You Hold On To Old Tax Records?

Charles Woodson, How Long Should You Hang On To Tax Records

Generally, taxpayers should hold on to their tax records for at least 3 years after the due date of the return to which those records apply. However, if the original return was filed later than the due date, including if the taxpayer received an extension, the actual filing date is substituted for the due date. A few other circumstances can require taxpayers to keep these records for longer than 3 years.

The statute of limitations in many states is 1 year longer than in the federal statute. This is because the IRS provides state tax authorities with federal audit results. The extra year gives the states adequate time to assess taxes based on any federal tax adjustments.

In addition to the potential confusion caused by the state statutes, the federal 3-year rule has a number of exceptions that cloud the recordkeeping issue:

  • The assessment period is extended to 6 years if a taxpayer omits more than 25% of his or her gross income on a tax return.
  • The IRS can assess additional taxes without regard to time limits if a taxpayer (a) doesn’t file a return, (b) files a false or fraudulent return to evade taxation, or (c) deliberately tries to evade tax in any other manner.
  • The IRS has unlimited time to assess additional tax when a taxpayer files an unsigned return.

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IRS: Summer Tips For Temporary Jobs, Marriage, Deductions And Credits

IRS, IRS Tips

Before starting a summer job, taking a vacation or sending the kids off to camp, the Internal Revenue Service wants taxpayers to know that some summertime activities may qualify for tax credits or deductions. The IRS also recommends that taxpayers check the amount of their withholding taxes now to help avoid surprises next filing season.

Here are some tips from the IRS that may help taxpayers lower taxes and avoid issues with their taxes:

  1. Worker classification matters.  As with other workers, business owners must correctly determine whether summer workers are employees or independent contractors. Independent contractors are not subject to withholding, making them responsible for paying their own income taxes plus Social Security and Medicare taxes. Workers can avoid higher tax bills and lost benefits if they know their proper status.
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TaxConnections Gift: Motivational Inspirations eBook

TaxConnections, Motivational Inspirations eBook

We are inspired by the number of tax and financial executives,  and CEOs of companies all over the world who visit TaxConnections to find a tax professional and ask tax questions. TaxConnections Members receive the attention of CEOs in Asia, Australia, Brazil, Canada China, India, Greece, Japan, Mexico, Singapore, Switzerland, Netherlands, Thailand, Russia and the United Kingdom(to name a few) who visit our site to gain the advice of tax experts worldwide.

In addition, TaxConnections Executive Search Services Division has conducted more than one thousand tax executive searches over the years. One of the many things I learned from CFO clients who retained us to conduct searches for tax experts you should learn. CEOs and CFOs search for tax experts who can break tax down into a simple language they can understand; they need a strong tax coach on their management team. They also want to find a tax professional who inspires and motivates a tax team to productivity.

TaxConnections Motivational Inspirations eBook is our gift to you to help inspire a new generation of tax professionals coming into the profession.

Click To Receive TaxConnections Motivational Inspirations eBook

 

 

IRS Clarifies Interest On Home Equity Loans Can Still Be Deductible

Lisa Nason, Interest On Home Equity Loans

In an Information Release, IRS has announced that in many cases, taxpayers can continue to deduct interest paid on home equity loans under the recently enacted Tax Cuts and Jobs Act.

Taxpayers may deduct interest on mortgage debt that is “acquisition debt.” Acquisition debt means debt that is: (1) secured by the taxpayer’s principal home and/or a second home, and (2) incurred in acquiring, constructing, or substantially improving the home. This rule hasn’t been changed by the Tax Cuts and Jobs Act.

Under pre-Tax Cuts and Jobs Act law, the maximum amount that was treated as acquisition debt for the purpose of deducting interest was $1 million ($500,000 for marrieds filing separately). Under the Tax Cuts and Jobs Act, for tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the limit on acquisition debt is reduced to $750,000 ($375,000 for a married taxpayer filing separately).

Under the Tax Cuts and Jobs Act, for tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, there is no longer a deduction for interest on “home equity debt.” The elimination of the deduction for interest on home equity debt applies regardless of when the home equity debt was incurred.

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Senior Vice President Tax – Family Office (Los Angeles, CA)

VP Tax Job, Tax Executive Search

Our retained search client is a global private family office that actively manages a global diversified portfolio of investments (including private equity and real estate), is seeking to hire a Senior Vice President, Tax. This executive will oversee the company’s global tax function and all matters concerning tax planning and strategy. The Senior VP Tax must have strong pass-through tax experience with M&A experience a plus. This is an exciting position with a direct impact on the success of the family office business operations as a whole.

• Responsible for global tax planning and compliance; reviewing and filing of all domestic and international corporate, personal, partnership and other income and indirect tax returns; implementing and managing company’s income tax and indirect tax compliance activities

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Tax Job – Tax Manager/ Partnerships – Northern California

Tax Manager/Partnerships (San Francisco Bay Area, CA)

The Tax Manager role requires partnership, S corp and individual tax consulting experience and the skills to effectively diagnose clients’ needs in order to develop and implement solutions. Primary responsibilities involve providing tax compliance, tax accounting, tax research and planning on partnerships, s corps and individual tax return for sophisticated clientele. We will build upon your technical strengths in order to expand your expertise in partnership, s corp and individual taxation. Our firm builds well-rounded tax experts to serve a myriad of client needs which leads to continued professional growth. Our culture is to develop trusted tax advisors with sound judgement with the highest ethical standards in the profession. The Tax Manager/Partnerships will be responsible for a range of projects including:

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Income Shifting Strategies For Business Owners

Haik Chilingaryan, Income Shifting Strategies For Business Owners

This post discusses different strategies that can potentially help a business owner become more tax efficient. Some methods include the restructuring of a business and establishing tax-deductible retirement plans.

Synopsis

The concept of characterization of income (or shifting of income) may result in the preservation of significant wealth. One method of shifting of income is through retirement planning. Another method is the restructuring of a business entity.

Retirement Planning

If the taxpayer is working and participating in a 401K with his employer, or he has an IRA, meaning it’s funded entirely by the taxpayer, the money that goes into such accounts may save him on taxes.

When the taxpayer puts money in such plans, he decides that instead of paying taxes now, he will instead pay taxes when he take those funds out, preferably when his tax brackets are likely to be reduced at his retirement. That’s because his total taxable income is likely to be lowered since he is no longer working, thereby lessening his income tax obligations.

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New Supreme Court Ruling Could Affect Many Online Shoppers

Lisa Nason, Online Shopping

The Supreme Court changed the landscape of online shopping Thursday, freeing state governments to compel retailers beyond their borders to collect sales-tax revenue from consumers and giving a boost to brick-and-mortar stores. With the boom in Internet commerce increasing exponentially, the court’s 5-to-4 decision could have an impact on millions of Americans almost immediately. For years, avoiding sales tax was a prime perk of online shopping.

States were the big winners at the Supreme Court. They previously were able to require only companies with a physical presence in their states to collect taxes, costing them an estimated $8 billion to $33 billion in uncollected taxes per year.

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The Tax Provision And The Tax Cuts And Jobs Act: Complimentary Training Webinar For Tax Professionals

Nick Frank, Instructor, Tax Provision Webinar

On Friday, July 20th 2018 TaxConnections invites tax professionals working in corporate tax departments to learn from nationally recognized tax provision instructor Nick Frank. After working with sophisticated tax software in Big Four and a Fortune 500 company, Nick developed a program to simplify the tax provision process.

For those of you who have attended his previous webinars through TaxConnections invitations, you now understand why Nick is such a fantastic instructor of the corporate tax provision. After personally interviewing thousands of tax professionals responsible of the corporate tax provision, and learning the pain tax professionals experienced preparing the tax provision, it was important to identify a solution that makes life easier for tax professionals.

If you have not had the opportunity to participate in one of Nick Franks tax provision webinars, please do so with our compliments. All you need to do is register here, show up and take great notes.

If you are unable to make this last part in the series, and want to register for the next 4 part series, register for this one today and we will invite you to the next series to learn all four parts.

 

 

Income Shifting Strategies To Help Business Owners Become More Tax Efficient

Haik Chilingaryan, Tax Lawyer, Tax Savings For business Owners

This segment discusses different strategies that can potentially help a business owner become more tax efficient. Some methods include the restructuring of a business and establishing tax-deductible retirement plans.

Synopsis

The concept of characterization of income (or shifting of income) may result in the preservation of significant wealth. One method of shifting of income is through retirement planning. Another method is the restructuring of a business entity.

Retirement Planning

If the taxpayer is working and participating in a 401K with his employer, or he has an IRA, meaning it’s funded entirely by the taxpayer, the money that goes into such accounts may save him on taxes.

When the taxpayer puts money in such plans, he decides that instead of paying taxes now, he will instead pay taxes when he take those funds out, preferably when his tax brackets are likely to be reduced at his retirement. That’s because his total taxable income is likely to be lowered since he is no longer working, thereby lessening his income tax obligations.

Read more

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