by | Apr 9, 2020 | Tax Tips and News
Erin Collins apparently loves a challenge. Collins, recently named the new National Taxpayer Advocate, has started her new position ahead of time in order to provide the Taxpayer Advocate Service (TAS) with complete leadership during this unsettled time.
Collins’ appointment as Advocate is a critical position inside the IRS, leading the TAS while serving as a voice for taxpayers inside the IRS and a senior advisor to the leadership of the agency. The National Taxpayer Advocate is also crucial for recommending potential changes in legislation.
“Collins is an excellent choice for this key position because she is familiar with tax issues from inside and outside the IRS,” said IRS Commissioner Charles Rettig. “The IRS leadership team and I look forward to a meaningful, productive working relationship with Collins and the Taxpayer Advocate Service to help improve our tax system for everyone.”
Not one to walk away from crisis, Collins said she’ll meet the challenge head-on.
“I will be starting my position as the National Taxpayer Advocate earlier than originally planned due to the recent national emergency,” Collins said. “I can’t imagine a more critical time to lead the Taxpayer Advocate Service and to help the nation’s taxpayers during this time.”
Collins was appointed in February by Treasury Secretary Steven Mnuchin. She replaces Nina Olson, who retired in July 2019 after serving as the nation’s Taxpayer Advocate for more than 18 years.
Commissioner Rettig also voiced his thanks to Bridget Roberts, who served as the acting Advocate when Olson left. Roberts now returns to her former post as Deputy National Taxpayer Advocate.
Tax Pro with a Proud History
Collins has extensive background in the tax community including 20 years as a managing director of KPMG’s Tax Controversy Services practice for the Western Area. Before that, she was an attorney in the IRS Office of Chief Counsel for 15 years. Throughout her career, she represented individuals, partnerships and corporate taxpayers on technical and procedural tax matters.
Collins has also provided pro bono services to taxpayers to resolve disputes with the IRS. Collins also donated her time to non-profit boards focusing on underserved communities where English is typically not the primary language spoken at home.
“Her interests fit in perfectly with the priorities of the Taxpayer Advocate Service, specifically, and the IRS, more generally,” Rettig added.
The Taxpayer Advocate Service helps taxpayers and protects taxpayer rights. The Service has at least one local taxpayer advocate office in every state as well as the District of Columbia and Puerto Rico. TAS can help taxpayers needing assistance resolving an IRS problem, if their problem is causing financial difficulty, or if the taxpayer believes an IRS system or procedure isn’t working as it should.
Taxpayers can call their local advocate, whose number is in their local directory. Check out the TAS website to learn more about the Taxpayer Advocate Service and how it can help.
– Story provided by TaxingSubjects.com
by | Apr 8, 2020 | Tax Tips and News
Use Drake Tax to file EIP returns!
Drake Software today announced that Drake Tax supports Economic Impact Payment (EIP) returns, providing customers a way to help those who don’t typically file a return receive the payment recently authorized by the CARES Act.
There has been some confusion surrounding the EIP program, specifically for those Americans who aren’t required to file but don’t receive Social Security benefits. That’s why the agency and professional tax software companies have worked hard to provide a solution for those who could be disproportionately affected if they do not timely receive EIP.
While those who have already filed a tax-year 2018 or 2019 return and Social Security beneficiaries are not required to do anything to receive EIP, the IRS still needs to confirm basic information, such as names, Social Security Numbers, dates of birth, dependents, physical address, and bank account information (if direct deposit is preferred) for those Americans who do not normally file a tax return.
The IRS this week notified tax professionals that guidance for helping this subset of Americans would soon be available in the e-Services mailbox. The agency is also expected to announce an online portal for affected Americans to report the information required to qualify for EIP. For Drake Software customers, filing an EIP return is a simple, four-step process that is currently available in Drake Tax.
While most EIP-return filers don’t have to worry about exceeding the $75,000 individual and $150,000 married-filing-jointly thresholds, there are a couple things they still need to consider. First, only filers with a Social Security Number are eligible for EIP, though there is an exception: ITIN-holding spouses of active members of the military may be eligible. Second, only SSN-holding dependents who are under 17 years old can be claimed on an EIP return.
To learn more about filing an EIP return with Drake Tax, check out the video tutorial on DrakeSoftware.com. Taxing Subjects will continue to provide updates related to COVID-19 procedures and EIP as the IRS issues them.
– Story provided by TaxingSubjects.com
by | Apr 7, 2020 | Tax Tips and News
For many of us, we’re living in a time that has no comparison. We’ve seen wars, famines, economic crashes, but no pandemic—until now. Jim Buttonow of Accounting Today magazine says for the Internal Revenue Service, a bad situation may be about to get even worse.
Buttonow sees the IRS in the unenviable position of being in the middle of a perfect storm for a federal agency. In the middle of a busy tax filing season, the IRS still has some 70 million individual tax returns to process, and it’s doing the job with 20,000 fewer workers than it had a decade ago.
But legislative remedies for the economic downturn caused by the coronavirus pandemic have also tasked the IRS with one of the biggest jobs in the country: distributing many of the benefit payments in the stimulus package passed by Congress. The IRS has been tasked with figuring out who gets a payment and then sending out millions of checks and electronic deposits. To cap it all off, there are changes to the Tax Code that were made part of the relief legislation that will have to be implemented in the IRS returns processing systems and other operations.
It’s a daunting to-do list at the very least.
In the short term, the virus is also forcing the IRS to make changes to the way it does business. The agency is trying to restructure operations so that it doesn’t require face-to-face contact with taxpayers, all the while attempting to conduct business as usual serving those taxpayers who need assistance.
One of the most urgent tasks is to create the capability for employees at IRS locations across the country to instead work from home. With about 70,000 employees nationwide, Buttonow says it will take the IRS some time to return to normal operations—and might not return to normal until long after the pandemic is declared over.
For taxpayers and tax pros alike, interacting with the IRS during this time will be completely different than we’re used to, Buttonow writes. He’s given us 10 important things to remember about IRS operations and just how to interact with the agency until the situation returns to something akin to normal.
- Use .gov First to Get Answers to Questions
Even during regular income tax filing, the IRS phone system struggles to keep up with demand. Instead, Buttonow writes, use the IRS website to research questions. Many taxpayers are trying to call the IRS help line to get stimulus payment information when the best—and easiest—way to find that information is to check the IRS coronavirus web page.
- Live Assistance is Scarce
Taxpayer Assistance Centers have all been shut down for the foreseeable future and IRS phone lines are likely to be down for a number of weeks as well. Many other IRS hotlines are out of commission, whether for taxpayers or tax pros. Don’t expect any phone support until we get close to the new tax deadline of July 15. The agency has suspended almost all audits and collection activities until then.
- The IRS will be Hard to Reach from Here On
Expect a mountain of backlogged correspondence to face the IRS once the agency opens the gates. Even with its plans for other types of channels for taxpayer communications, such as email or its new e-fax lines, Buttonow says the agency likely will face a mountain of correspondence and clogged telephone lines after normal operations start up again.
- Put That Audit on Hold—Mostly
In its “People First Initiative,” the IRS announced all new audits had been suspended and wouldn’t resume until after July 15. However, Buttonow observes it’s realistic to expect the agency to continue to use audits in the meantime to stop suspicious or erroneous refunds. Any taxpayer with a questionable refund is likely to see the IRS filing filters stop their refunds until the taxpayer can verify the return is legitimate.
- Reprieve on Back Taxes
The IRS has halted collection enforcement activities through July 15. And, as part of the People First Initiative, liens, levies and passport restrictions are also on hold during that time. Proceeding of collection alternatives—including offers in compromise—are similarly suspended. Taxpayers can, however, still go to the IRS website to set up a new monthly payment plan for tax due.
- Monthly Installment Agreement Payment Not Needed—or Is It?
On one hand, the IRS “People First Initiative” said taxpayers aren’t required to make the monthly payment on an established installment agreement from April 1 through July 15. That’s fine for taxpayers who pay by check, but those who use direct debit are caught in the middle. Most banks say, “Hey, can’t stop the draft,” and taxpayers have to call the IRS directly to void a payment during the “free” Buttonow says that means taxpayers are really stuck.
“Taxpayers are in a pickle: IRS phone lines are closed, so taxpayers cannot contact the IRS to “skip” the automatic payments during this time. Also, the IRS is not automatically suspending direct debit payments. The IRS has not provided any guidance on how it will enable taxpayers to initiate a skip on their scheduled drafted payments,” Buttonow writes.
- Use IRS Transcripts to Answer Account-Related Questions
An official transcript from the IRS can help answer questions about AGI, estimated tax payments and more. Taxpayers can access transcripts immediately by setting up an IRS online account and using the “Get Transcript” tool on gov. They can also call the automated “Get Transcript” line and order a transcript to be delivered to the record on file with the IRS.
- Call Local Taxpayer Advocate Service (TAS) Office if You Have a Hardship
This includes taxpayers who experience a financial hardship due to a hold on a refund. The central TAS hotline is closed but taxpayers can contact a local advocate by phone. Go online for a list of local advocates: https://www.irs.gov/advocate/local-taxpayer-advocate
- File Now if You Can
The IRS is still processing tax returns and most stimulus payments will be figured from filed 2019 returns or from a 2018 return if a ’19 return hasn’t been filed yet. It’s a good time to file the required back tax returns, especially important for those who haven’t filed a 2018 and 2019 return.
- Stimulus Payments Won’t go for Tax Debts
The stimulus legislation says the IRS won’t apply the amount of the stimulus payment against any tax due owed. It can, however, be used for outstanding child support debt.
Buttonow notes that the IRS, while sending out the stimulus checks, is not in charge of deciding how much each taxpayer gets. That’s laid out in the stimulus legislation, and with any lawmaking process, it’s likely that some Americans will fall through the cracks.
Our thanks to Jim Buttonow and our friends at Accounting Today magazine for their article. You can access the full version here.
– Story provided by TaxingSubjects.com
by | Apr 6, 2020 | Tax Tips and News
Federal authorities say they’ve arrested a Pennsylvania man in connection with a nationwide IRS impersonation scam.
Made in the USA
The federal indictment that prompted the arrest was returned against Ronnell Taylor, Jr., 37, of Jeannette, Pa. He was named in a one-count indictment from the federal grand jury in the Western District of Pennsylvania, alleging conspiracy to commit wire fraud. Besides Taylor, the indictment also named Barry Nealer, 40, of Pittsburgh, and Michael Galanis, 31, of Export, Pa.
The Scam at Work
The federal indictment says the conspiracy involved impersonators calling victims across the country and posing as IRS employees. The fake IRS “employees” left voicemails instructing the victim to contact the IRS at specific telephone numbers.
When the unsuspecting victims called the provided numbers, their calls were automatically forwarded to voice-over-Internet (VoIP) phone numbers and routed to the IRS impersonators, who then extorted money from the victims to pay bogus tax debts.
The incitement alleges the setup of the scheme started in March, 2016 and ran through August in 2017. Taylor, Galavis and Nealer activated SIM cards and programmed prepaid cell phones to automatically forward victims’ calls to the VoIP phone numbers.
Taylor also allegedly supplied his codefendants with prepaid SIM cards to activate and instructed them on how to activate them and program the cell phone numbers associated with the SIM cards in order to forward calls to VoIP phones.
Prospective victims were called by an IRS impersonator, who directed them to wire money or purchase stored-value cards, iTunes gift cards, Target retail store gift cards, or other gift cards to pay tax debts alleged by the impersonators. The ring managed to defraud their victims of some $89,000.
Investigation Continues
If found guilty, Taylor faces a maximum sentence of 20 years in federal prison, a fine of $250,000, or both. The U.S. Attorney’s Office says under Federal Sentencing Guidelines the actual sentence imposed would be based upon the seriousness of the offense and any prior criminal history.
While the news release from federal authorities describes Taylor’s arrest, it makes no mention of arrest of Nealer or Galavis, which could mean they remain at large.
At his initial court appearance in January, Taylor posted a $20,000 unsecured bond and was released. Federal investigators say additional legal actions are pending.
The United States Treasury Inspector General for Tax Administration, U.S. Department of Homeland Security, and the U.S. Postal Inspection Service conducted the investigation leading to the indictment.
– Story provided by TaxingSubjects.com
by | Apr 3, 2020 | Tax Tips and News
Last Saturday, Taxing Subjects spotlighted a phishing scam that emerged after legislators passed the CARES Act, which distributes economic impact payments to help recover from financial hardships caused by COVID-19. Today, the IRS outlined common tactics used by these scammers, as well as briefly explaining the economic impact payment process.
What is the ‘coronavirus stimulus scam?’
Scammers are posing as government officials and contacting targets to request information they say is required to process coronavirus stimulus payments. Unfortunately, they are now using every tactic possible, from email and phone scams to text messages, social media, and fake websites.
As IRS Criminal Investigation Chief Don Fort points out in the press release, “History has shown that criminals take every opportunity to perpetrate a fraud on unsuspecting victims, especially when a group of people is vulnerable or in a state of need.” To avoid becoming a victim of this latest phishing scam, the agency suggests keeping an eye out for communications that use any of these common tactics:
- [Emphasizing] the words “Stimulus Check” or “Stimulus Payment.” The official term is economic impact payment.
- [Asking] the taxpayer to sign over their economic impact payment check to them.
- [Asking] by phone, email, text, or social media for verification of personal and/or banking information saying that the information is needed to receive or speed up their economic impact payment.
- [Suggesting] that they can get a tax refund or economic impact payment faster by working on the taxpayer’s behalf. This scam could be conducted by social media or even in person.
- [Mailing] the taxpayer a bogus check, perhaps in an odd amount, then [telling] the taxpayer to call a number or verify information online in order to cash it.
Remember, the IRS will not request information to process “stimulus payments” by phone, email, text, or social media. It turns out that most economic impact payments will be issued automatically.
What is the real economic impact payment process?
“In most cases, the IRS will deposit economic impact payments into the direct deposit account taxpayers previously provided on tax returns,” the IRS explains. “Those taxpayers who have previously filed but not provided direct deposit information to the IRS will be able to provide their banking information online to a newly designed secure portal on IRS.gov in mid-April.”
While the IRS generally uses recently filed tax returns to determine economic impact payment eligibility, the agency says that retirees who don’t have a filing requirement—Social Security recipients, in particular—do not have to do anything to receive their payment. (At this time, it remains unclear how the IRS will issue payments to other taxpayers who aren’t required to file.)
Just like a standard tax refund, those who don’t set up a direct deposit account will receive a physical check in the mail.
What should I do if I am targeted by the stimulus scam?
If someone calls asking for information needed to process a stimulus payment, hang up the phone; the IRS does not want you to interact with scammers. Similarly, if you get an email or message on Facebook asking for that information, do not respond, and do not click on any embedded links. Instead, the IRS wants you to report the incident to follow the directions on their Report Phishing and Online Scams webpage.
Source: IR-2020-64
– Story provided by TaxingSubjects.com
National Tax Service