Category Archives: IRS Notices

Phishing and Scams

HOW TO IDENTIFY PHISHING AND SCAMS BEFORE THE DAMAGE IS DONE.

The scammers are out there still. In fact, you may receive an email today from someone claiming that your business information was entered incorrectly for 2014 and to avoid costly fines, penalties, etc., click here, open this, do that. STOP! DON’T DO IT.

THE IRS DOES NOT CONTACT YOU BY EMAIL – OR PHONE OR SOCIAL MEDIA. PERIOD.

The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts. PERIOD.

What is phishing?

Phishing is a scam typically carried out through unsolicited email and/or websites that pose as legitimate sites and lure unsuspecting victims to provide personal and financial information.

Report all unsolicited email claiming to be from the IRS or an IRS-related function to phishing@irs.gov. Recent scams have used the Electronic Federal Tax Payment System (EFTPS) to attract potential victims. Also, if you’ve experienced any monetary losses due to an IRS-related incident, please report it to the Treasury Inspector General Administration (TIGTA) and file a complaint with the Federal Trade Commission (FTC) through their Complaint Assistant to make the information available to investigators.

What you need to do if you receive a suspicious IRS-related communication

Taxpayers May Be Asked For Verification By IRS

Taxpayers Receiving Identity Verification Letter Should Use IDVerify.irs.gov

WASHINGTON – The Internal Revenue Service today reminded taxpayers who receive requests from the IRS to verify their identities that the Identity Verification Service website, idverify.irs.gov, offers the fastest, easiest way to complete the task.

Taxpayers may receive a letter when the IRS stops suspicious tax returns that have indications of being identity theft but contains a real taxpayer’s name and/or Social Security number. Only those taxpayers receiving Letter 5071C should access idverify.irs.gov. Continue reading →

Looking Forward to 2015 Tax Benefits

In 2015, Various Tax Benefits Increase Due to Inflation Adjustments

For tax year 2015, the Internal Revenue Service announced annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2014-61 provides details about these annual adjustments. Continue reading →

ACA & The Individual Shared Responsibility Payment

**Did you hear about The Individual Shared Responsibility?**

Beginning in 2014, the individual shared responsibility provision of the Affordable Care Act requires each individual to:

Maintain a minimum level of health care coverage – known as minimum essential coverage, or
Qualify for an exemption, or
Make an individual shared responsibility payment when filing their federal income tax returns.

Minimum essential coverage generally includes government-sponsored programs, employer-provided health coverage, and coverage purchased in the individual market, including the Health Insurance Marketplace. Most people already have health insurance coverage that qualifies as minimum essential coverage, and therefore will not need to make a payment if they maintain their qualified coverage. However, for each month that you or a member of your family is without minimum essential coverage and does not qualify for an exemption, you will need to make an individual shared responsibility payment.

If you and your dependents had minimum essential coverage for each month of 2014, you will check a box indicating that when you file your 2014 federal income tax return. If you qualify for an exemption, you will attach a form to your tax return to claim that exemption. If you are required to make the individual shared responsibility payment, you will calculate your payment and make the payment with your return.

If you choose to make an individual shared responsibility payment instead of maintaining minimum essential coverage, this means you will not have health insurance coverage to help pay for medical expenses.

In general, the individual shared responsibility payment for 2014 is the greater of:

One percent of your household income above the income filing threshold for your tax filing status, or
A flat dollar amount of $95 per adult and $47.50 per child (under age 18) in your family, but no more than $285 per family.

The individual shared responsibility payment is also capped at the cost of the national average premium for bronze level health plans available through the Marketplace that would cover everyone in your family who does not have minimum essential coverage and does not qualify for an exemption – for example, $12,240 for a family of five. However this maximum fee will only impact the small number of high-income taxpayers who choose to go without health insurance. The payment amount is based on each individual’s personal circumstances, and information about figuring the payment can be found on our ‘Calculating the Payment’ page on IRS.gov/aca.

Example of Payment Calculation

Eduardo and Julia are married and have two children under age 18. No family member has minimum essential coverage for any month during 2014, and no family member qualifies for an exemption. For 2014, their household income is $70,000 and their tax return filing threshold amount is $20,300.

Using the household income formula: Subtract the tax return filing threshold amount for 2014 from the 2014 household income, then multiply the answer by one percent (0.01).
$70,000 – $20,300 = $49,700
One percent of $49,700 equals $497.00.
Using the flat dollar amount formula: Add $95 per adult for Eduardo and Julia to $47.50 per child – for their two children.
$95.00 + $95.00 + $47.50 + $47.50 = $285.00

Eduardo and Julia’s shared responsibility payment for the year for 2014 is $497. That’s because the household income formula amount of $497 is greater than flat dollar formula amount of $285, and it is less than the $9,792 annual national average premium for bronze level coverage for a family of four in 2014. More examples can be found on IRS.gov/aca.

More Information

Find out more about the tax-related provisions of the health care law at IRS.gov/aca.

Find out more about the health care law at HealthCare.gov.

Source: IRS- HCTT-2014-18

Getting Married? Add this to-do on your checklist

Getting Married Can Affect Your Premium Tax Credit

The IRS reminds newlyweds to add a health insurance review to their to-do list. This is particularly important if you receive premium assistance through advance payments of the premium tax credit through a Health Insurance Marketplace.

If you, your spouse or a dependent gets health insurance coverage through the Marketplace, you need to let the Marketplace know you got married. Informing the Marketplace about changes in circumstances, such as marriage or divorce, allows the Marketplace to help make sure you have the right coverage for you and your family and adjust the amount of advance credit payments that the government sends to your health insurer. Continue reading →

For Most Truckers, Highway Use Tax Return Due Sept. 2

BREAKER, BREAKER : Issue Number: IR-2014-82

WASHINGTON — The Internal Revenue Service today reminded truckers and other owners of heavy highway vehicles that in most cases, their next federal highway use tax return is due on Tuesday, Sept. 2, 2014.

This year’s Sept. 2 due date, pushed back two days because the normal Aug. 31 deadline falls on a Sunday, generally applies to Form 2290 and the accompanying tax payment for the tax year that begins on July 1, 2014, and ends on June 30, 2015. Returns must be filed and tax payments made by Sept. 2 for vehicles used on the road during July. For vehicles first used after July, the deadline is the last day of the month following the month of first use.

Though some taxpayers have the option of filing Form 2290 on paper, the IRS encourages all taxpayers to take advantage of the speed and convenience of filing this form electronically and paying any tax due electronically. Taxpayers reporting 25 or more vehicles must e-file. A list of IRS-approved software providers can be found on IRS.gov.

Paper returns must be mailed and postmarked by midnight on Sept. 2. As usual, IRS offices will be closed on Labor Day, Monday, Sept. 1.

The highway use tax applies to highway motor vehicles with a taxable gross weight of 55,000 pounds or more. This generally includes trucks, truck tractors and buses. Ordinarily, vans, pick-ups and panel trucks are not taxable because they fall below the 55,000-pound threshold. The tax of up to $550 per vehicle is based on weight, and a variety of special rules apply, explained in the instructions to Form 2290.

More information can be found in the Trucking Tax Center at IRS.gov/truckers.

Congressional and IRS Practices Impact Fraud

IRS WATCHDOG PROVIDES CONGRESS WITH MID-YEAR REPORT AMID ALLEGATIONS OF BAD IRS PRACTICES

Author’s Note: This post explains why we advocate that taxpayers select a professional tax practitioner who is either a CPA, attorney or Enrolled Agent. If you don’t, you may end up the victim of fraud and the problems attached to it.

CAUTION Exclamation Timing is everything, and the National Taxpayer Advocate Service (an independent *watchdog* group within the IRS ) just presented its mid-year report to Congress revisiting its 2002 Congressional recommendation to authorize the IRS to establish *minimum standards* for tax return preparers. Continue reading →

IRS Adopts Taxpayer Bill of Rights

Taxpayer Bill of Rights

10 Provisions to be Highlighted on IRS.gov, in Publication 1 IR-2014-72, June 10, 2014 WASHINGTON ― The Internal Revenue Service today announced the adoption of a “Taxpayer Bill of Rights” that will become a cornerstone document to provide the nation’s taxpayers with a better understanding of their rights.

A 2012 taxpayer survey conducted by the Taxpayer Advocate Service (TAS) showed that less than half of U.S. taxpayers believed they had rights – and only 11% said they knew what the rights were.

The Taxpayer Bill of Rights takes the multiple existing rights embedded in the tax code and groups them into 10 broad categories, making them more visible and easier for taxpayers to find on IRS.gov.

Publication 1, “Your Rights as a Taxpayer,” has been updated with the 10 rights and will be sent to millions of taxpayers this year when they receive IRS notices on issues ranging from audits to collection. The rights will also be publicly visible in all IRS facilities for taxpayers and employees to see.

“The Taxpayer Bill of Rights contains fundamental information to help taxpayers,” said IRS Commissioner John A. Koskinen. “These are core concepts about which taxpayers should be aware. Respecting taxpayer rights continues to be a top priority for IRS employees, and the new Taxpayer Bill of Rights summarizes these important protections in a clearer, more understandable format than ever before.”

The IRS released the Taxpayer Bill of Rights following extensive discussions with the Taxpayer Advocate Service, an independent office inside the IRS that represents the interests of U.S. taxpayers. Since 2007, adopting a Taxpayer Bill of Rights has been a goal of National Taxpayer Advocate Nina E. Olson, and it was listed as the Advocate’s top priority in her most recent Annual Report to Congress.

“Congress has passed multiple pieces of legislation with the title of ‘Taxpayer Bill of Rights,'” Olson said. “However, taxpayer surveys conducted by my office have found that most taxpayers do not believe they have rights before the IRS and even fewer can name their rights. I believe the list of core taxpayer rights the IRS is announcing today will help taxpayers better understand their rights in dealing with the tax system.”

The tax code includes numerous taxpayer rights, but they are scattered throughout the code, making it difficult for people to track and understand. Similar to the U.S. Constitution’s Bill of Rights, the Taxpayer Bill of Rights contains 10 provisions. They are:

The Right to Be Informed
The Right to Quality Service
The Right to Pay No More than the Correct Amount of Tax
The Right to Challenge the IRS’s Position and Be Heard
The Right to Appeal an IRS Decision in an Independent Forum
The Right to Finality
The Right to Privacy
The Right to Confidentiality
The Right to Retain Representation
The Right to a Fair and Just Tax System

The rights have been incorporated into a redesigned version of Publication 1, a document that is routinely included in IRS correspondence with taxpayers. Millions of these mailings go out each year. The new version has been added to IRS.gov, and print copies will start being included in IRS correspondence in the near future.

The timing of the updated Publication 1 with the Taxpayer Bill of Rights is critical because the IRS is in the peak of its correspondence mailing season as taxpayers start to receive follow-up correspondence from the 2014 filing season. The publication initially will be available in English and Spanish, and updated versions will soon be available in Chinese, Korean, Russian and Vietnamese.

The IRS has also created a special section of IRS.gov to highlight the 10 rights. The web site will continue to be updated with information as it becomes available, and taxpayers will be able to easily find the Bill of Rights from the front page. The IRS internal web site for employees is adding a special section so people inside the IRS have easy access as well.

As part of this effort, the IRS will add posters and signs in coming months to its public offices so taxpayers visiting the IRS can easily see and read the information.

“This information is critically important for taxpayers to read and understand,” Koskinen said. “We encourage people to take a moment to read the Taxpayer Bill of Rights, especially when they are interacting with the IRS. While these rights have always been there for taxpayers, we think the time is right to highlight and showcase these rights for people to plainly see.”

“I also want to emphasize that the concept of taxpayer rights is not a new one for IRS employees; they embrace it in their work every day,” Koskinen added. “But our establishment of the Taxpayer Bill of Rights is also a clear reminder that all of the IRS takes seriously our responsibility to treat taxpayers fairly.

Koskinen added, “The Taxpayer Bill of Rights will serve as an important education tool, and we plan to highlight it in many different forums and venues.”

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Electronic Recordkeeping, Hard Copies and the IRS

Even if your system crashes, you still must be able to RECONSTRUCT your records to their specifications. Do you know what they are?

Read about what you can and can’t do if you plan on storing your tax records electronically. In many cases you need to keep hard copies – in print. The IRS must be able to access your electronic media at any time it wants. You need to know what you can and cannot do. One thing you CAN’T DO is use the excuse “my computer hard drive crashed.”

Read our post on the use of electronic media for saving tax & business records.

IRS chases taxpayers for old debts

Social Security, Treasury target taxpayers for their parents’ decades-old debts

On April 10, the Washington Post led with a story that created an uproar and outrage by taxpayers across the country. The story focused on the seizure of tax refunds by the government to repay debt that was, in some instances, decades old.

“Social Security claims it overpaid someone in the Grice family — it’s not sure who — in 1977. After 37 years of silence, four years after Sadie Grice died, the government is coming after her daughter.

Update from Forbes. The SSA has suspended its scope of more than 10 years. Meaning, they will not pursue alleged over-payments on any taxpayer more than 10 years. But, did you know that the government gave itself the right to chase taxpayers for old debts indefinitely. And the easiest way to do it is through an offset. Where you ask? When?

“To be clear, the government has long had the authority to seize tax refunds to pay back certain obligations (more on that in a moment), but in 2008, the rules that limited the time to seize funds were rewritten. The change was made in the Food, Conservation, and Energy Act of 2008 – sometimes called “the farm bill” – since, as you know, Congress is terribly fond of tossing bits of new law into totally unrelated bills (like those credit card reporting requirements inserted into the Housing and Economic Recovery Act of 2008 or how a bill called the Service Members Home Ownership Tax Act of 2009 turned into the Patient Protection and Affordable Care Act). The provision, tucked near the back of the Act, which clocks in at more than a quarter million words, says simply:

(e)(1) Notwithstanding any other provision of law, regulation, or administrative limitation, no limitation on the period within which an offset may be initiated or taken pursuant to this section shall be effective. (2) This section does not apply when a statute explicitly prohibits using administrative offset or setoff to collect the claim or type of claim involved.”

SSA’s announcement might have been a relief to some taxpayers but the law is still on the books. And so long as the law authorizes government agencies to collect on those old debts, taxpayers could be in danger of having their tax refunds seized for years to come.

And remember, that the IRS can go as far as they want to if they suspect fraud, so make sure your taxes and records are in order, and have your taxes prepared by a tax professional, such as a CPA or EA.

GOT QUESTIONS? CALL 619-589-8680.

At US-TaxLaws, we do more than just tax preparation. We review your previous returns. We may just review 1 or 2 years. But if you are an in-home business, we will take a closer look to make sure you are getting all of the deductions your in-home business is permitted. US-TaxLaws is your best source for professional tax preparation and/or financial consulting services.

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http://www.washingtonpost.com/politics/social-security-treasury-target-hundreds-of-thousands-of-taxpayers-for-parents-old-debts/2014/04/10/74ac8eae-bf4d-11e3-bcec-b71ee10e9bc3_story.html

http://www.forbes.com/sites/kellyphillipserb/2014/04/24/payback-is-forever-tax-refund-offset-law-remains-on-the-books/#./?&_suid=139851903245309521199226209964

As the Tax Season ends, IRS answers: Where’s My Refund?

Larger IRS IR-2014-54, April 17, 2014

WASHINGTON — With the close of the tax filing season, the vast majority have filed their income tax returns and received their income tax refunds. As of last Friday, the IRS had received almost 113 million tax returns and issued more than 85 million refunds, about 78 percent of all the refunds the agency will issue this year.

However, taxpayers who have not yet received their refunds can use the “Where’s My Refund?” on IRS.gov or on the smartphone application IRS2Go 4.0 to find out about the status of their income tax refunds. As of April 11, 2014, Where’s My Refund? has been accessed almost 160 million times.

The Where’s My Refund?tool enables taxpayers to track the status of their refund. Initial information will normally be available within 24 hours after the IRS receives the taxpayer’s e-filed return or four weeks after the taxpayer mails a paper return to the IRS. The system updates only once every 24 hours, usually overnight, so there’s no need to check more often.

Taxpayers should have their Social Security number, filing status and exact refund amount when accessing Where’s My Refund?

Taxpayers can find more information about refunds and other tax topics at IRS.gov.

2014 FILING SEASON STATISTICS
Cumulative statistics comparing 4/12/13 and 4/11/14
Individual Income Tax Returns:	2013		2014		% Change
Total Receipts	112,403,000		112,741,000		0.3
Total Processed	103,880,000		110,266,000		6.1
E-filing Receipts:
TOTAL	99,787,000		101,289,000		1.5
Tax Professionals	62,163,000		61,956,000		-0.3
Self-prepared	37,624,000		39,332,000		4.5
Web Usage:
Visits to IRS.gov	278,307,884		251,540,768		-9.6
Total Refunds:
Number	84,581,000		85,262,000		0.8
Amount	$229.607	Billion	$234.547	Billion	2.2
Average refund	$2,715		$2,751		1.3
Direct Deposit Refunds:
Number	69,680,000		69,924,000		0.3
Amount	$202.188	Billion	$202.167	Billion	-0.01
Average refund	$2,902		$2,891		-0.4

Source: http://www.irs.gov/uac/Newsroom/As-the-Tax-Season-ends-IRS-answers:-Where’s-My-Refund

Tips for Taxpayers, Victims about Identity Theft and Tax Returns

Identity theft remains a top priority for the Internal Revenue Service in 2014

IRS YouTube Videos
ID Theft: IRS Efforts on Identity Theft

FS-2014-2, January 2014

Identity theft remains a top priority for the Internal Revenue Service in 2014. Identity theft is one of the fastest growing crimes nationwide, and refund fraud caused by identity theft is one of the biggest challenges facing the IRS. This year, the IRS continues to take new steps and strong actions to protect taxpayers and help victims of identity theft and refund fraud.

CAUTION IDENTITY THEFT ALERT Stopping refund fraud related to identity theft is a top priority for the tax agency. The IRS is focused on preventing, detecting and resolving identity theft cases as soon as possible.

The IRS has more than 3,000 employees working on identity theft cases. We have trained more than 35,000 employees who work with taxpayers to recognize and provide assistance when identity theft occurs.

Taxpayers can encounter identity theft involving their tax returns in several ways. One instance is where identity thieves try filing fraudulent refund claims using another person’s identifying information, which has been stolen. Innocent taxpayers are victimized because their refunds are delayed.

Here are some tips to protect you from becoming a victim, and steps to take if you think someone may have filed a tax return using your name: Continue reading →

IRS Combats Identity Theft and Refund Fraud on Many Fronts

IDENTITY THEFT MAJOR CONCERN FOR IRS

Stopping identity theft and refund fraud is a top priority for the Internal Revenue Service (IRS). The agency’s work on identity theft and refund fraud continues to grow, touching nearly every part of the organization. For the 2014 filing season, the IRS has expanded these efforts to better protect taxpayers and help victims.

The IRS assigned more than 3,000 IRS employees to work on identity theft-related issues. IRS employees are working to prevent refund fraud, investigate identity theft-related crimes and help taxpayers who have been victimized by identity thieves. In addition, the IRS provides training to more than 35,000 employees who work with taxpayers to recognize identity theft indicators and help people victimized by identity theft.

Continue reading →

Part I : Tips Substantiating Tax Deductions for Charitable Contributions

SUBSTANTIATING CHARITABLE CONTRIBUTIONS

Many charitable organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with section 170. Most eligible organizations are listed in Exempt Organizations Select Check (Pub 78 database). Continue reading →

IRS Releases the “Dirty Dozen” Tax Scams for 2014

Identity Theft, Phone Scams Lead List

IR-2014-16, Feb. 19, 2014

WASHINGTON — The Internal Revenue Service today issued its annual “Dirty Dozen” list of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.

The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.

“Taxpayers should be on the lookout for tax scams using the IRS name,” said IRS Commissioner John Koskinen. “These schemes jump every year at tax time. Scams can be sophisticated and take many different forms. We urge people to protect themselves and use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues.”

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shutdown scams and prosecute the criminals behind them.

Continue reading →

CA Franchise Tax Board Warns Taxpayers About Scam

Franchise Tax Board, State of CA

For Immediate Release
tel 916.845.4800 | Public Affairs Office
cell 916.204.8026 | John Barrett
John.Barrett@ftb.ca.gov

(Sacramento)–With the tax season upon us, the Franchise Tax Board (FTB) is reminding taxpayers to be wary of theft ploys involving scammers attempting to mimic FTB to obtain access to your personal information. Continue reading →

2013 changes to itemized deduction for medical expenses

Now is the time to talk with your tax preparer to understand the other 2013 changes to your itemized deductions

The rules are changing if you plan to itemize medical deductions on your 2013 federal tax return that you will file in 2014. It does not affect income tax returns for the 2012 taxable year filed in 2013.

Beginning Jan. 1, 2013, you can claim deductions for medical expenses not covered by your health insurance that exceed 10 percent of your adjusted gross income. This change affects your 2013 tax return that you will file in 2014.

There is a temporary exemption from Jan. 1, 2013 to Dec. 31, 2016 for individuals age 65 and older and their spouses. If you or your spouses are 65 years or older or turned 65 during the tax year you are allowed to deduct unreimbursed medical care expenses that exceed 7.5% of your adjusted gross income. The threshold remains at 7.5% of AGI for those taxpayers until Dec. 31, 2016.

Beginning Jan. 1, 2017, all taxpayers may deduct only the amount of the total un reimbursed allowable medical care expenses for the year that exceeds 10% of your adjusted gross income.

Page Last Reviewed or Updated: 06-Aug-2013

How Will The Affordable Care Act Affect Child Care Providers?

Child Care Tax Specialists takes a look at the comprehensive landmark changes in the health care law and its impact. Read the full post here http://childcaretaxspecialists.com/how-will-the-affordable-care-act-impact-child-care-professionals/