When dealing with your taxes, it is important to be cautious of small mistakes that could break the rules and result in a tax audit, tax problems or some involvement by the IRS. However, the IRS is also responsible for following rules that are set for them as well.
Ratified in 2014, the IRS issued a Taxpayer Bill Of Rights which lists the rights of a Taxpayer by way of the tax code, giving a better understanding of what the IRS can and cannot do.
NerdWallet provides the following list of fundamental Taxpayer rights that you should be aware of when dealing with the IRS:
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; and
The Right to a Fair and Just Tax System.
“The first principle here is, these aren’t rights that are granted by the IRS, but they’re simply recognized by the IRS, and they all come down from the law that’s either made by Congress or made by the courts,” says Fred Daily, a tax attorney in St. Petersburg, Florida.
Although taxpayers have the advantage to these rights, there are still limitations. They may help you defend yourself in a conflict, however, it is not effective when resolving problems with a specific IRS employee.
According to a new report from the Treasury Inspector General for Tax Administration (TIGTA), the IRS has improved their investigation methods in detecting identity theft related fraudulent tax returns. Yet, the IRS needs to be more factual with their identity theft estimates.
To determine the efficiency of the IRS when it comes to detecting and preventing identity theft, tax problems, and how they collaborate with other agencies and tax industry partners to coordinate information, the TIGTA performed an audit.
Through this report, they found that 568,329 undetected fraudulent tax returns were filed with refunds. These refunds totaled more than $1.6 billion for tax year 2013, which was a drop of more than $523 million from the previous year.
To reduce the fraudulent activities, the TIGTA believes the new January 31st deadline for employers to file their W-2 forms with Social Security Administration will be helpful. This allows IRS to utilize the Form W-2 for comparison to the tax return sooner for potential identity theft.
Here are six recommendations that the TIGTA provided from investigating the audit, sourced from Accounting Web:
• Include all accelerated W-2s to compare with tax returns for possible identity theft;
• Identify and evaluate potential fraud in tax returns by creating a principle;
• Use state lead data to help evaluate tax returns;
• Use tax return data to find the refund amount associated with electronically filed tax returns that were rejected when computing revenues;
• Review revenues to ensure that duplicate tax returns are deleted; and
• Tax returns with mismatched income because of duplicated income documents should not be considered for potential identity theft.
As the tax season is approaching, so are an increasing number of IRS scams. According to WBIW – a radio station broadcast, the Washington County Sheriff’s Department is reporting a significantly higher number of scams with newer techniques and advanced technology. The scammers are using threats and fake caller IDs to mislead people.
Sheriff Roger Newlon states, “One of the more common scams involve callers, who threaten to arrest or prosecute if money is not immediately paid.” In other cases, scammers might attempt to use technology to mask a caller ID to make it seem like the call is coming from the IRS. The majority of these calls come from overseas phone services.
There are a variety of ways to avoid being scammed. Scammers may use cunning means to deceit you, however, their approach does not reciprocate to actual IRS demands. Therefore, it can be an obvious catch if you observe the following signs:
Call about taxes owed without first having MAILED you a tax bill
Deny you an opportunity to question or appeal their claim for IRS tax relief.
Require you to use a specific payment method for paying your taxes such as iTunes cards, Greendot Pre-paid cards or wire services such as Western Union or MoneyGram.
Threaten to bring in the local police or other law enforcement groups to have you arrested for not paying.
Ask for your banking information over the telephone.
Send you an email.
Once you are aware of these signs and you encounter one of these attempts, it is important to immediately hang up and contact the IRS at (800)829-1040. You can also report the incident to your local law enforcement agency, as well as file a complaint with the Federal Trade Commission. This will assist in the goal to eliminate these scammers.
All government tax organizations such as the IRS, the state tax agencies and the tax industry sent an important notification to all employers that the W-2 Phishing scan has progressed, dispersing to other regions such as school districts, nonprofits and group organizations. The scammers are conjoining this new scheme with an old scheme of wire transfers that is hurting organizations double time. IRS Commissioner John Koskinen stated, “This is one of the most dangerous email phishing scams we’ve seen in a long time. It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme.”
The IRS, the tax industry and the state tax agencies work together to provide safety precautions to taxpayers, which makes it extremely difficult for cybercriminals to proceed with fraudulent activities. These criminals use different hoaxing methods to conceal the email they are sending and make it seem like it is an email from a boss or executive leader from your organization. This con is referred to as business email spoofing (BES) or business email compromise (BEC). The email gets sent to the human resources department or payroll department asking for a list of all employees W-2 for tax purposes. Since it is a disguise, the employees send the requested information without confirming if the email was actually sent from their executive leaders. However, when an employer reports this con to the IRS, they can take the necessary steps to protect their employee’s private information and advise the employer on how to proceed.
Although the Security Summit has notified taxpayers of this scam last week, they are seeing an increase in identity theft within a week. They urge all employers to be attentive to the W-2 scam because it is evolving and spreading to school districts, casinos, restaurants, staffing agencies, healthcare, shipping and freight and many more businesses. Businesses who received the email last year have reported that they are receiving the email again this year, but earlier in the tax season. Employers should proceed with caution and notify all their employees about the scam that is circulating and cultivating day by day.
Furthermore, scammers are emailing the employees and asking not only for the employees W-2 list, but they are also requesting a wire transfer of a certain amount be made promptly. Employees who succumb to the con are costing their employers thousands of dollars on top of their employee’s private information being released. The IRS and related tax governments are encouraging all employers to discuss these issues with their employees and urge them to ignore all emails that ask for such information. They are also insisting employers to create a policy that prohibits employees to release private information about other employees.
If an employer is unfortunate enough to go through something like this they should email to firstname.lastname@example.org and place “W2 Scam” in the subject line. They can also file a compliant to with the Internet Crime Complaint Center (IC3,) run by the FBI
Taxpayers should also be advised to be safe online. Searching certain things such as “tech support” may also have a scam embedded within it, so if any information is required before gaining access to the information you want to receive, the IRS urges taxpayers to disregard it. We encourage you to research on this issue and go IRS’s website for more information on what options you have if you are a victim of W-2 identity theft.
Are you finally cashing in your vacation time to take a Euro trip? Well, if your travel plans include a passport and an airplane, then you need to be mindful about a new law that could prevent you from enjoying your time off from work, according to Forbes.
The FAST Act (Fixing America’s Surface Transportation) was implemented as a law on December 4, 2015. The purpose of the FAST Act was to create funding for highways, roads and other means of transportation. In this act, a new clause is implemented that allows the State Department to seize passports of “seriously delinquent” taxpayers. Because the IRS does not have the authority to seize passports, they must advise with the State Department about the taxpayers who have not paid their dues. Previously, the State Department had the authority to seize passports, but they did not have the authority to gain access to taxpayer information because of the breach of privacy laws.
The IRS has found a loophole to stop taxpayers from enjoying leisure time if they owe money to the government. Therefore, now the State Department has the ability to refuse to issue or renew passports for anyone who owes the government over $50,000, which includes any interest and penalties. Along with the State Department, the Secretary of the State is also allowed to invalidate a passport that has been already issued to a delinquent taxpayer. The amount for a “seriously delinquent” tax debt may change each year due to cost of living and inflation, however there are some exceptions to this law.
If you have settled an Installment Agreement or an Offer in Compromise, then this newly implemented law will not affect you. You are also in the safe zone if you are scheduled for a Collection Due Process hearing that has to do with a levy or an innocent spouse claim, where the tax debt has been suspended. Unfortunately, there is no grace period for the State Department to revoke an existing passport if you are a delinquent taxpayer. The IRS does however notify you when they list you as a “delinquent taxpayer” to the State Department. They then give you 90 days after seizing your passport to either make the payment, resolve any errors that were made or enter yourself into a payment plan.
It does not stop there! If you’re a taxpayer who is stuck in this situation and say to themselves, “Okay, I just won’t travel out of the country! Walla! Problem solved!” You are wrong! There is another law implemented called the REAL ID Act that prohibits federal agencies from accepting driver licenses or identification cards from taxpayers who have a debt travelling domestically. Well, this puts you in a sticky situation! Now you can’t even travel in state! This Act was implemented to encourage taxpayers to settle their debt before enjoying a vacation. After all, if you can pay for a vacation, then you should be able to pay your debts!
As of January 22, 2018 taxpayers who have a debt and are traveling with an identification card or drivers license must have another form of identification, usually a passport, which is acceptable for TSA (Transportation Security Administration). The only exception is if the state has extended the right to the traveler, otherwise all other travelers must have alternative proof of identification. In the upcoming years, the rules will be reinforced strictly and proficiently. In October 1, 2020 every traveler will need a REAL-ID compliant license to travel domestically. Alterative forms of identification such as passport will also be acceptable.
Why let the government dictate when or if you can take a trip, or enjoy time off with your loved ones. Filing your taxes accurately and on time is crucial for your credit, your freedom and your sanity. Go on that Euro trip and travel the world because you only have one life and you shouldn’t let the government prevent you from creating unforgettable memories.
Earning 53k or less? If you are, you may be eligible to qualify for Earned Income Tax Credit (EITC). EITC is an income tax credit for rural taxpayers, who are living paycheck to paycheck. Since it’s a refundable credit, there are certain criteria you must meet before you can apply. If you do qualify and claim it, you are capable of paying less on federal tax, paying no tax or receiving a large tax refund. EITC refunds can be as large as about $6,000 or as small as $500 depending on your qualifications, family size, and children’s qualifications. The following is some basic information about how you know if you are qualified for EITC.
How do I know if I am qualified for EITC?
You have earned income and adjusted gross income within certain limits; AND
You meet certain basic rules; AND
You either: meet the rules for those without a qualifying child; OR
Have a child that meets ALL the qualifying child rules for you, or your spouse if you file a joint return.
Some of the Basic Rules
You or your child must have a social security number
Must file either one of these: married filing jointly, head of household, qualifying widow or widower, or single.
Your tax year investment income needs to be $3,400 or less for the year.
Must not file Form 2555 (see IRS website for more information about the form)
You must earn an income that is greater than $1
Both your earned income and adjusted income needs to be under a certain amount (see IRS website for more details)
Contact Tax Defense Partners today for additional details.
The IRS is successfully beginning to accept 2016 income tax returns with over 153 million returns estimated to be filed. You have until April 18,2017 to file your taxes before you have the IRS knocking on your door, unless you have already filed for an extension. The deadline to file your taxes for those who have been granted an extension is October 16, 2017. The IRS has extended its due date to file your taxes because the usual April 15 deadline is on a Saturday, which would be beneficial because it would give taxpayers until the following Monday, but April 17th, is a holiday. Last year, about 111 million dollars in refunds was issued to taxpayers, but the IRS expects more than about 70% of taxpayers to receive their refund in 2017.
If you experience a refund delay
Refunds are normally issued in less than 21 days, however a new law passed that now requires the IRS to withhold tax refunds for taxpayers who claimed Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until February 15,2017. Even if some of the portion of the refund is not a part of EITC or ACTC, the IRS must hold the entire refund. This gives the IRS time to process the paperwork and detect and prevent fraud.
Let Tax Defense Partners file your tax returns
The IRS and State Taxing Agencies will not allow any Taxpayer to establish a formal agreement until all their returns are filed. Unless you file your 2016 Tax Return on time, you may be jeopardizing your current or future agreement. Don’t let the IRS get the upper hand.
If you secure Tax Defense Partners as your tax preparer right away you will get first pick on your tax preparation appointment day and time. Our expert tax preparation team will make sure you get every credit and deduction you deserve. Call us today to get started.
Consultants recommending the construction of expensive broadband networks are inundating local governments across the country, according to Yellow Hammer News. Unfortunately, these broadband networks are built using taxpayers’ money. Consultants believe that these new and improved networks will attract business money and improve the quality of life for the residents. This is all true, but who is flipping the bill on this stuff?
According to critics, these consultants are just telling the bureaucrats what they want to hear. These bureaucrats represent the local governments. CTC Technology & Energy consultants managed to wiggle their way into constructing a $57 million broadband network with the help of Huntsville Utilities.
Consultants in various cities and counties across the country have done research regarding these taxpayer subsidized broadband networks, and have found that it’s hard to find a government that hasn’t been offered high-speed internet in some capacity. Both fully-fledged broadband networks and backbones are the most popular options being pushed by consultants. With a backbone, the internet providers can connect to it and then provide high speed internet for all of their customers.
Community Broadband LLC are expecting profits of around $400,000 by the fifth year if the city of Midway, GA built it’s $3.2 million network. The most favorable responses to this proposition are coming from business-owners since they can then subscribe to the high-speed internet service to conduct business faster.
Peachtree City decided to scrap it’s government broadband project and go with local providers to serve the citizens’ broadband needs. The city continues to use Community Broadband as a consultant on communication issues. Consultants cannot be held liable for what the voters decide on.
Marietta sold its FiberNet broadband network at a loss of $24 million in 2004. The network had 180 customers along its 210 mile stretch from Kennesaw to Alpharetta. The city couldn’t keep up with the equipment upgrade costs, so they had to let it go.
The promises made to local governments by consultants are very seductive. The consultants and network builders profit handsomely while the taxpayers are caught in the mess. Local taxpayers are stuck with mountains of debt after municipal broadband networks go down. They have the odds stacked against them.
Obama’s recently signed Executive Order now requires that the President of the United States be a federal taxpayer. According to Andy Borowitz from NewYorker.com, President Obama exclaimed that “Since the President has such a large say in how federal taxes are spent, it only makes sense that he or she contribute to those taxes too.”
Moreover, President Obama reiterated that people should not look too much into the timing of this Executive Order being signed, saying that “it just seemed like the right thing to do”. Andy Borowitz declares that the signing of this executive order was met with opposition by Republicans on Capitol Hill. Paul Ryan, one of the more prominent opponents to the Executive order, claimed that “This is nothing less than an attack on the American Dream of paying no taxes”.
Accordingly, this didn’t phase the President, as he is getting another Executive Order ready that would require all cabinet members to have held at least a summer job relevant to their posts, Borowitz states.