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Tag Archive for IRS

Avoid Scams: Know The Facts On How The IRS Contacts Taxpayers

IRS Scams

Crooks impersonating the IRS either by phone, email or in person cost people their time and money. The IRS urges people to stay vigilant against schemes and scams and avoid becoming a victim.

Here are some important tips for taxpayers to keep in mind to avoid scams:

How the IRS initiates contact
The IRS initiates most contacts with taxpayers through regular mail delivered by the U.S. Postal Service. However, there are special circumstances in which the IRS will call or come to a home or business, such as:

When a taxpayer has an overdue tax bill,

To secure a delinquent tax return or a delinquent employment tax payment, or

To tour a business, for example, as part of an audit or during criminal investigations.

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IRS Increases Visits To High-Income Taxpayers Who Haven’t Filed Tax Returns

IRS Visits Taxpayer Homes

As part of a larger effort to ensure compliance and fairness, the Internal Revenue Service today announced that it will step up efforts to visit high-income taxpayers who in prior years have failed to timely file one or more of their tax returns.

Following the recent and ongoing hiring of additional enforcement personnel, IRS revenue officers across the country will increase face-to-face visits with high-income taxpayers who haven’t filed tax returns in 2018 or previous years. These visits are primarily aimed at informing these taxpayers of their tax filing and paying obligations and bringing these taxpayers into compliance.

“The IRS is committed to fairness in the tax system, and we want to remind people across all income categories that they need to file their taxes,” said Paul Mamo, Director of Collection Operations, Small Business/Self Employed Division. “These visits focusing on high-income taxpayers will be taking place across the country. We want to ensure taxpayers know their options to get right with their taxes and avoid bigger issues later.”
For the current tax season, the IRS reminds taxpayers that everyone should file their 2019 tax return by the April 15 filing deadline regardless of whether they can pay in full. Six-month filing extensions are also available, although that does not extend the April deadline for paying any taxes owed.
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IRS, Treasury Issue Proposed Regulations Updating Income Tax Withholding Rules

IRS Proposed Regulations

The U.S. Department of the Treasury and the Internal Revenue Service issued proposed regulations updating the federal income tax withholding rules to reflect changes made by the Tax Cuts and Jobs Act (TCJA) and other legislation.

In general, the proposed regulations, available now in the Federal Register, are designed to accommodate the redesigned Form W-4, Employee’s Withholding Certificate, to be used starting in 2020, and the related tables and computational procedures in Publication 15-T, Federal Income Tax Withholding Methods. The proposed regulations and related guidance do not require employees to furnish a new Form W-4 solely because of the redesign of the Form W-4.

Employees who have a Form W-4 on file with their employer from years prior to 2020 generally will continue to have their withholding determined based on that form.
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IRS Helps Workers, Businesses With New Gig Economy Tax Center

Gig Economy Tax Center

The Internal Revenue Service launched a new Gig Economy Tax Center on IRS.gov to help people in this growing area meet their tax obligations through more streamlined information.

“The IRS developed this online center to help taxpayers in this emerging segment of the economy,” said IRS Commissioner Chuck Rettig. “Whether renting out a spare bedroom or providing car rides, we want people to understand the rules so they can stay compliant with their taxes and avoid surprises down the line.”

The gig economy is also known as the sharing, on-demand or access economy. It usually includes businesses that operate an app or website to connect people to provide services to customers. While there are many types of gig economy businesses, ride-sharing and home rentals are two of the most popular.
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FBAR Non-Willful Penalties Are Real

DARLENE HART

While there has been no official change to the current FBAR penalty rules we laid out in 2015, it should be noted there was a recent court case which has reached an unfavorable result for FBAR Penaltiestaxpayers with regard to potential FBAR non-willful penalties.

In an April 2019 California District Court case (U.S. vs Boyd), the court ruled that while the penalty rules for non-willful failure to comply with FBAR reporting requirements are ambiguous, it agreed with the IRS that it is more appropriate to impose the penalty ($10,000 max for the years dealt with in the Boyd case) on unreported accounts, on an account by account basis rather than per a calendar year penalty. So, rather than a maximum $10,000 penalty for all unreported accounts in a given year, in Boyd, the taxpayer was assessed a $10,000 per account penalty per year of non-compliance.
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Summary Of FATCA Reporting For U.S. Taxpayers

FATCA Reporting

Reminder: You may have to report information about foreign financial assets and accounts.
The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to combat tax evasion by U.S. persons holding accounts and other financial assets offshore. The Treasury Department and the IRS continue to develop guidance concerning FATCA. For current and more in-depth information, please visit FATCA.

Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. There are serious penalties for not reporting these financial assets (as described below). This FATCA requirement is in addition to the long-standing requirement to report foreign financial accounts on FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) (formerly TD F 90-22.1).

FATCA will also require certain foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. The reporting institutions will include not only banks, but also other financial institutions, such as investment entities, brokers, and certain insurance companies. Some non-financial foreign entities will also have to report certain of their U.S. owners.
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IRS Takes Next Step On Abusive Micro-Captive Transactions; Nearly 80% Accept Settlement, 12 New Audit Teams Established

IRS On Micro-Caps

WASHINGTON − The Internal Revenue Service announced the overwhelming acceptance of a time-limited settlement offer made to certain taxpayers under audit who participated in abusive micro-captive insurance transactions.

Nearly 80% of taxpayers who received offer letters elected to accept the settlement terms. In addition, the IRS is establishing 12 new examination teams that are expected to open audits related to thousands of taxpayers in coming months.

“The overwhelming acceptance rate of the private settlement offer is a reflection of the success of the government’s work to stop this abuse,” said IRS Commissioner Chuck Rettig. “Taxpayers who elected to accept the IRS’ terms have done the right thing by coming into compliance with their federal tax obligations and putting this behind them. Putting an end to abusive schemes is a high priority for the IRS.”

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How IRS Handles Passport Certifications For People With Tax Debt Over $52,000

How The IRS Handles Passports With Tax Debt

To help support fairness and integrity in the tax system, the Internal Revenue Service has made a change in how it handles passport certifications for people with significant tax debt. The Fixing America’s Surface Transportation (FAST) Act, signed into law in December 2015, requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. For further information, see Notice 2018-1 regarding implementation of IRC 7345. The FAST Act also requires the State Department to deny their passport application or deny renewal of their passport. In some cases, the State Department may revoke their passport.

A taxpayer with a seriously delinquent tax debt is generally someone who owes the IRS more than $52,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy. So far, the program has resulted in $1.2 billion in tax payments from taxpayers who the IRS certified to the State Department as being seriously delinquent in their tax debt.

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What Happens To Your Tax Return When You File It? Learn Why You Should Have A Tax Professional Do Your Tax Return!

Learn What Happens To Your Tax Return When Filed

We thought you should know the importance of finding a tax professional to prepare your tax return this year? Although it is a  secret most people do not talk about, a trained tax practitioner will  most always get a better return and savings for you on your tax return. In addition, would you prefer to have a knowledgeable tax practitioner navigate the process for you if you encounter a problem or would you prefer to navigate the IRS yourself?

Take a look at the insightful chart that the National Taxpayer Advocate put together on how the IRS works when you file your tax return. Here is the chart! When you hire a tax professional their job is to ensure you gain the best tax savings and receive all the appropriate tax credits.

You will always do better when you hire a tax expert who is experienced over your multiple other options. This is a well-known secret the tax community knows but unsuspecting taxpayers are generally uninformed of many tax savings available to them.

Hire a trusted tax professional; you can now find thousands of tax professionals nationally and internationally and connect with them easily at www.taxconnections.com

Tax Professionals: We are requesting your commentary on taxes you save clients this year over a taxpayer preparing it themselves.

 

IRS Announces Taxpayers May Qualify For Significant Tax Benefit: Earned Income Tax Credit

Earned Income Tax Credit(EITC)

The Internal Revenue Service and its partners nationwide remind taxpayers about the Earned Income Tax Credit on January 31, “EITC Awareness Day.” This is the 14th year of the EITC awareness campaign that alerts millions of workers to this significant tax credit.

“The EITC is a vital tax credit that helps millions of hard-working working families around the nation,” said IRS Commissioner Chuck Rettig. “It’s critical that people review the credit to see if they qualify. Increasing awareness about the EITC is important, and the IRS is proud to support the ongoing efforts by partner groups across the country for sharing this critical information with taxpayers.”

There are outreach events and activities scheduled to promote EITC awareness around the country. The EITC is the federal government’s largest refundable federal income tax credit for low- to moderate-income workers. It can give taxpayers a refund even if they owe no tax.
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IRS Relief To Financial Institutions Affected By Tax Law Change Raising Age For Required Minimum Distributions

IRS Law On Required Distributions

The Internal Revenue Service has provided relief to financial institutions that were expected to provide required minimum distribution (RMD) statements to IRA owners by January 31, 2020.

Notice 2020-6 (PDF) clarifies that if an RMD statement is provided for 2020 to an IRA owner who will turn age 70½ in 2020, the IRS will not consider the statement to be incorrect, but only if the financial institution notifies the IRA owner no later than April 15, 2020, that no RMD is due for 2020.

The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) changed the age for which an RMD is first required from age 70½ to 72. Under prior law, financial institutions would have needed to notify IRA owners who attained age 70½ in 2020 about their 2020 RMDs by January 31, 2020.

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IRS And Treasury Issue Guidance For Students With Discharged Student Loans And Their Creditors

IRS And Discharged Student Loans

The Internal Revenue Service and Department of the Treasury issued Revenue Procedure 2020-11 (PDF) that establishes a safe harbor extending relief to additional taxpayers who took out federal or private student loans to finance attendance at a nonprofit or for-profit school.

Relief is also extended to any creditor that would otherwise be required to file information returns and furnish payee statements for the discharge of any indebtedness within the scope of this revenue procedure.

The Treasury Department and the IRS have determined that it is appropriate to extend the relief provided in Rev. Proc. 2015-57Rev. Proc. 2017-24 and Rev. Proc. 2018-39 to taxpayers who took out federal and private student loans to finance attendance at nonprofit or other for-profit schools not owned by Corinthian College, Inc. or American Career Institutes, Inc.

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