In last week’s blog, Telephone Service in an Omnichannel Environment – The IRS Must Make Communicating with the IRS Over the Phone Easier for Taxpayers, I discussed some of the struggles taxpayers will face during filing season while trying to get help from the IRS over the phone. Given the challenges of increased call volume and confusion over the tax law changes, along with the uncertainty of the IRS’s final funding level for Fiscal Years 2018 and 2019, the IRS has projected its “level of service” (LOS) on its Accounts Management lines will be anywhere from 40 percent to 80 percent for Filing Season (FS) 2018. In a later blog, I will discuss my concerns about how the IRS calculates LOS and whether that measure provides accurate information about callers’ experience with the phones. Read More
Tag Archive for Nina Olson
Jan. 29th marked the start of the 2018 tax filing season, as the IRS began accepting and processing an estimated 155 million individual tax returns for Tax Year 2017. Taxpayers have between now and April 17, 2018 to file their individual tax returns with the IRS, either online or through the mail, or obtain a filing extension until Oct. 15th. Filing season can be stressful for taxpayers in the best of times, as many have questions about how to properly report their earnings, claim deductions, and comply with their tax obligations. Read More
The other day, I came across an interesting item in the news, describing that for the first time in its history, Macy’s was only letting people with appointments visit its famous Santa. I was interested in this because, for all intents and purposes, the Internal Revenue Service (IRS) had been “appointment only” in its Taxpayer Assistance Centers (TACs) since November 2016. So on the face of it, the IRS was in the vanguard of customer service.
In this blog post, I will discuss how the IRS has been dealing with a growing sector of our economy called the “sharing” economy (also known as the gig economy). Proponents of the sharing economy believe it promotes marketplace efficiency by enabling individuals to generate revenue from assets while the assets are not being used personally. For example, a vacation home owner may rent out her home while she is not using it. Airbnb (short-term home rentals) and Uber (shared car services) are two of the more prominent companies that facilitate a sharing economy.
Unlike private creditors, the IRS has wide discretion to exercise its administrative levy powers. Internal Revenue Code (IRC) § 6331(a) says the IRS can generally “levy upon all property and rights to property.” The IRS must make notice and demand for payment and in most instances provide collection due process (CDP) rights prior to levy. And under IRC § 6334, the IRS is prohibited from levying on certain sources of payments, such as unemployment benefits and child support. But overall, the IRS can cast a large net when it chooses to levy a taxpayer’s property, including funds in retirement accounts.
Read More
In last week’s blog, I discussed my concerns regarding the failure of the IRS Office of Appeals (Appeals) and Wage & Investment (W&I) to adequately identify the particular frivolous position prompting mailing of a notification letter. This letter provides taxpayers with 30 days to withdraw the frivolous position included on an income tax return or in a submission to the IRS, and thereby avoid application of the $5,000 frivolous return penalty imposed by IRC § 6702. The lack of clear identification regarding the objectionable issue, however, can sometimes make it very difficult for taxpayers to timely determine and correct the frivolous position.
In the early 1980’s, Congress became concerned with the rapid growth of deliberate defiance of the tax laws by taxpayers objecting to the payment of tax on frivolous grounds or through reliance on obviously unsupportable tax positions. As a result, Congress passed Internal Revenue Code (IRC) § 6702, which, as currently formulated, generally imposes an immediately assessable $5,000 penalty on tax returns adopting a position that the IRS has identified as frivolous or reflecting a desire to delay or impede the administration of Federal tax laws. This penalty, however, was primarily intended to address “protest” returns and was not aimed at taxpayers who were unintentionally non-compliant, such as in the case of innocent mathematical or clerical errors. The goal was to establish a regime that discouraged obstructive returns, but not one that adopted punitive measures against potentially good-faith taxpayers.
Taxpayers affected by the wildfires in California that began October 8, 2017 may qualify for tax relief from the Internal Revenue Service. The President declared that a major disaster exists in the state of California and as of October 16, 2017, the following counties are impacted:
- Butte
- Lake
- Mendocino
- Napa
- Nevada
- Sonoma
- Yuba
With the open enrollment period for the Health Insurance Marketplace beginning November 1st, it is the appropriate time to remind taxpayers and preparers of the various Affordable Care Act (ACA) estimators the Taxpayer Advocate Service (TAS) has developed and made available to the public. Whether the taxpayer is an individual or employer, we have several tools available to assist in estimating credits and payments related to the ACA. Keep in mind that they only provide estimates, rather than accurate calculations, to use as a guide in making decisions regarding the taxpayer’s tax situation.
Taxpayers can claim the Earned Income Tax Credit (EITC) in more than one tax year, so using the audit as an opportunity to educate them about the requirements for claiming EITC is of particular benefit to them and to the IRS. If a taxpayer claims the credit in error but understands why there was an error, he or she can not only become compliant for the year of any audit, but remain compliant going forward. However, audits are expensive for both the IRS and taxpayers, and are intrusive and intimidating for the taxpayer. There are many EITC returns the IRS does not audit but identifies as containing an error. Thus, while the IRS may not have the resources to audit these taxpayers, through other cost-effective approaches, it can educate them about why they appear to have erroneously claimed EITC, and avert future noncompliance.
Current Articles
Explaining Nexus Threshold By StateUnderstanding the intricate web of sales tax nexus thresholds is key for businesses navigating the complexities of state taxation laws. As the digital age continues to reshape traditional business […]
Alert: Advisors To Clients Who Have Created Family Limited PartnershipsWe wanted to share with you a topic discussed at last week’s live Q&A session, which was held during one of this spring’s Fundamentals of Flow-Through® Partnership, LLC & S Corporation Tax […]
Reform California Unveils Plan To Repeal New “Flat Fee” Utility SurchargeCalifornia politicians are imposing a new “flat fee” on your utility bill that you have to pay regardless of whether you use any energy that month and the rate will now be based on your income! […]
Progressive Tax Could Cost Nearly $1800 A Year In Home Equity To Illinois Homeowners If Voters Approve The IncreaseAccording to the Illinois Policy Organization… Gov. J.B. Pritzker promises his $3.7 billion “fair tax” would only hit those making over $250,000, but it also threatens to cost more than 3.2 […]
Thinking About Selling Or Merging Your Tax Advisory Practice?We have been approached many times over the years for a solution for small firm business owners who want to sell their practice and need a succession plan. We now have a solution for you and your […]
Recent Comments