The New IRS People First Policy

The Internal Revenue Service has been stating since the Trump Administration came into office that they wanted to be a “kinder and gentler” government agency, and it now appears they are taking action to support the claim. The fallout of the Coronavirus pandemic has resulted in the passage of a new emergency relief bill providing funds for all American taxpayers regardless of there previous tax liability status. This means that many who still owe taxes will still be allowed to receive their relief payments with no interception by the IRS. Not only will the relief payments be exempt from interception, but the agency is also suspending the Field Collection Activities through July 15th, 2020. This means that Cuyahoga Falls residents who have a tax issue may want to consider discussing the issue settlement during this suspension period with the assistance of an experienced Cuyahoga Falls lawyer like the legal professionals at Brunsdon Law.

Installment Agreements

All preexisting installment payment agreements to the Internal Revenue Service have been suspended with this legislation, so anyone who is in the process of satisfying a prior arrangement will have some time to recover after the relief checks are released. Those who cannot pay their full tax liability with their 2019 filing will be allowed a monthly installment agreement or extension automatically.

Offers in Compromise

The Internal Revenue Service also negotiates offers in compromise when attempting to collect tax revenues. This usually occurs over a designated period of information exchange, but they too are being suspended until July 15th, 2020. Anyone who has a pending OIC will be postponed at least to that date. This gives delinquent tax payers more time to negotiate a deal that could be better than anticipated when their Cuyahoga Falls lawyer is successful in building a strong case for a reduced tax burden. Offers in compromise could also be satisfied with an installment agreement as well, which could result in less liability than in standard negotiations during a regular collection situation.

Non-Filers

There are also many who have not filed taxes this year as yet, not to mention those who who have not filed in quite some time. The IRS says all of those who did not file before this year’s deadline should file before July 15th and no penalties will be assigned in their case. Low income wage earners who have not filed even for multiple years will be eligible for installment agreements also, and the agency urges all of these delinquent filers to do so during this grace period. This is actually an excellent opportunity for these individuals to comply with a favorable outcome.

Meetings Suspensions

All in-person meetings between taxpayers and IRS agents have also been suspended until July 15, 2020, which means that communications will be conducted by mail and scheduled phone calls. All of those facing a potential physical meeting with agency representatives will have this requirement waived during this time, which can be a significant advantage to the taxpayer. Many people and businesses have unique situations for certain tax aspects such as earned income credit and business interruption due to the Covid-19 pandemic, and the IRS will use a reduced demand policy. This also includes cases that are in the appeals process. However, the agency also stresses that compliance during this suspension period is still necessary and filers should take advantage of the opportunity while it exists. Statute of limitations issues will still be observed by the agency, and a Notice of Deficiency could still be filed against a taxpayer when they do not respond in a timely fashion when general information is requested.

Fresh Start Policy

It is important for tax filers to understand this is a good opportunity for them to make their tax account current with the Internal Revenue Service regardless of their personal situation. The odds are good that the agency will be lenient with those who comply and show a willingness to be honest and responsible with the government. The policy is intended as a “fresh start” shift from the former standard operational procedure, but it is still best to have comprehensive legal counsel during this period to avoid substantial penalties that could be avoided with a tax professional representing your case.

Contact Brunsdon Law

All Cuyahoga Falls residents who have questions concerning the new tax policy should contact Cuyahoga Falls lawyer Terri Brunsdon at Brunsdon Law for more information.

Electronic communication is a wonderful thing when used appropriately for a legitimate purpose. Emailing a friend or business associate is much quicker, and sometimes more reliable, than mail. The ability to electronically file your tax return results in quicker processing and faster refunds. It is also easier because you do not need to stand in line at the post office to receive stamped confirmation of mailing your return.

But, electronic communication carries greater risks, especially during tax season. While scams are always present in today’s society, the risk of a scam rises during tax season. Scams directed towards taxpayers are constantly evolving after taxpayers and the Internal Revenue Service catch on to the last scam. Taxpayers must be especially vigilant at spotting a scam during tax season. The Internal Revenue Service advises taxpayers that scammers use specific methods to perpetrate scams and provides the following information to help spot a scam.

SSN Scam of the Season

It seems that each year scam artists devise a new plan to glean information or even extract financial data from unwitting people by calling them and posing as an agent of the IRS or the Department of Treasury. Most calls will include a demand for payment or a request for personal information such as your social security number. Obtaining a social security number is very powerful for these unscrupulous actors in achieving their thievery objective. The newest scam involves robocalls alerting a potential victim to suspension of their social security number and directing them to push a number to speak with an operator. This fear tactic is also generally associated with a required payment to a specific account that they control. This is clearly an SSN scam – your social security number will NEVER be suspended. You should always hang up on these calls immediately. In addition, make a note of the actual phone number that called you because this will help in shutting down the number. The IRS encourages reporting these calls as soon as possible. Taxpayer scams are a real problem for the Service and they are serious about prosecuting these thieves who are using the power of the federal government to dupe individuals into compliance with their demands.

The IRS Will Not Call You for Payment

This is worth repeating: THE IRS WILL NOT CALL YOU AND DEMAND PAYMENT! The first rule when dealing with the Internal Revenue Service is to understand that the Service will not call anyone on the phone and demand payment of any type. The agency will typically send a letter stating that they have made a change to your return and you owe additional tax or you have unpaid taxes for a tax year or you are being audited. The letter will always provide a phone number and address to contact the Service if the taxpayer wants to discuss the issue. The letter will also always provides a time limit for responding to the Service. If you receive a letter or notice from the IRS and doubt its authenticity, you can contact the IRS, a tax attorney or an accountant for further guidance.

Any individual who has received a call or other form of communication where the caller is acting like an agent of the government should report the incident to the Treasury Inspector General for Tax Administration and also email information, including your contact information, to the IRS at phishing@irs.gov. This will assist the Service in tracking and shutting down the scammers. You should also report a phone call to the Federal Trade Commission. While no one ever really wants to communicate with the Internal Revenue Service, reporting scams is of great help to others who may be targeted and assists the Service in shutting down these operations. The Service is clearly your best advocate in stopping taxpayer scams.

The preceding is solely intended for informational purposes and is not intended as legal or tax advice. It is important for taxpayers to consult with an experienced tax attorney or Certified Public Accountant. Contact our office if you would like to further discuss your taxes

Understanding Tax Estimation

No one enjoys paying taxes at tax time, and the thought of paying taxes in advance is even worse. But, the real truth is that savvy business managers and investors are required to make allowances for taxes from the very beginning of the year. While the typical worker who is a company employee will have money withheld from their earnings throughout the year, then receiving a W-2 form at the end of the year stating how much money they have contributed toward their tax obligations, business operators and investors will allow for taxes first. Individuals or married couples who work regular jobs and operate side businesses have a tax concern as well. Married couples may actually want to file separately, or at least separate from the business. Taxpayers with investments who receive dividends each quarter will also often pay additional estimated taxes as the year progresses. And of course, most small business taxes are filed every three months. Everyone should give their tax burden some forethought, and especially those who are self-employed and have a considerable income.

Deciding on an Estimated Contribution

All taxpayers and small businesses need to estimate first how much money they expect to receive in annual income and then calculate their small business estimated taxes. Married couples may need to evaluate their filing status as well, as there could be benefits to filing either jointly or separately. This will depend on the individual situation. Some self-employed people who run businesses actually pay themselves just as any other worker and make their personal tax contributions in the traditional tax deduction format. Other self-employed individuals will opt to keep what they earn and pay taxes quarterly, while others may pay in small business estimated taxes during the year to their IRS account and then file annually. And of course, there are still those who wait until the end of the year and file traditionally, taking the hit for the extra tax obligations at the end of the year. The problem for these individuals is that they may be required to pay an underpayment penalty for failing to meet their obligations throughout the year, which can be avoided by making estimated tax payments during the year. This is actually a requirement for those who expect their tax debt to be in excess of $1000 for the year.

Percentages and Amounts to Avoid a Penalty

A good general rule for many taxpayers is estimating tax requirements in $1000 increments using a 90% rule regarding tax obligations. Those who expect their tax deductions to be within 90% of their total annual tax debt will often choose to pay extra at the end of the year, and those who pay each quarter could opt to pay an additional amount with their regular tax payments. Individuals with significant wealth will have the means to pay the entire tax bill annually, but this would also mean they could still pay estimated amounts in advance to avoid any subsequent penalty. It is not uncommon for a business of significant size to calculate their annual taxes going forward at the beginning of the year as a necessary business expense and then look for strategies to reduce the tax burden during the year. Annual tax returns can apply to businesses as well as individual workers, and they will assuredly be paid when small business taxes are not questioned when appropriately filed.

Any taxpayer who works a regular job and operates a side business always has the option of requesting additional tax deductions be withheld from their regular earnings. Most employers have no problem with this choice, as they are not required to match deductions as in Social Security tax obligations. This works well for those who will have a small tax obligation from their personal business operation and have a significant income from regular employment. And it is an easy method of ensuring there are adequate resources already in place when the final tax burden is calculated. This clearly depends on the individual situation. However, it is always best to be “better safe than sorry” when dealing with the Internal Revenue Service. The IRS may want to present a more amiable attitude towards taxpayers, but make no mistake about the fact that agents are very serious about collecting the government’s share, whether it be fair or not. It is always best to be prepared beforehand, and sometimes required by law.

Every individual should be on the lookout for financial scams of any type, as they are clearly prevalent in contemporary society. Unscrupulous actors like to develop schemes that sound valid in presentation, but are actually just fronts for theft and other forms of deception intended to steal assets from an unsuspecting victim who does not recognize and understand their tactics.

The actors have no problem even imitating government agencies such as the Internal Revenue Service if they can con anyone into believing their deception and gain access to money. The goal is to steal anything that can be stolen, ranging from financial assets to personal identification information that can be used to fraud other individuals or businesses. This kind of illegal activity is more common than most people realize, and it is always a good decision to take some time to learn how to spot these criminals. Here are a few reminders regarding IRS tax scams.

Phone Contact Policy

Many of us have received a phone call where the person claims to be from the IRS or the Department of Justice and you need to immediately pay up or they will be at your door to make an arrest. The IRS rarely contacts a taxpayer by telephone. It can happen, but not by standard policy. Instead, the IRS will send a contact letter first, also known as a “notice letter,” and it will typically inform the taxpayer of issues with their tax account or tax return.

In addition, the IRS never sends emails or text messages. When the IRS does call, it is typically a courtesy call of sorts, and they will never demand immediate delinquent payments. In fact, IRS agents CANNOT take payment over the phone. Any payment to the IRS must be mailed to the address provided by the Service. IRS notifications are formal and all taxpayers have rights to challenge issues with their account and to appeal decisions made by the IRS or to the US Tax Court. In fact, the IRS has a “Taxpayer Bill of Rights” ( known as Publication 1) that can be downloaded here. The service often includes this publication when mailing taxpayers notices on changes to your account, request for audit, demands for payment, and intent to levy or lien the taxpayer.

“Phishing” Scams

Another problem is receiving an email contact from a fake IRS agent or tax preparer. This is also referred to as a “phishing” scam. The sender requests specific sensitive information such as your social security number, bank account number, credit card information and so on. The sender’s intent is to use this information for illegal purposes. Even opening the email or clicking on any hyperlinked website in the email could trigger a malware program that will scour your computer for any exposed identification information, including passwords to financial accounts in some instances.

These scams can actually be more problematic than fake preparer claims or demands for immediate payments. The damage that can be done to the victim and their financial status can be extensive, including credit rating damage, embezzlement of personal assets, and ongoing identity theft as the culprit acts continually in assuming the victim’s identity. This can actually happen in a variety of ways, and it is always a good personal practice to mark spam in your email accounts and dump the notices daily because of potential malware concerns.

Scams Happen Throughout the Year

Tax scams are not necessarily season-specific, although the typical taxpayer associates taxes with the first part of the year. Many business operators pay taxes quarterly and are in regular contact with the IRS. Be aware of this activity at any point in time, and never provide any information without documented validation from the contacting party. The best response is to hang up on the caller and contact the local police department immediately, including if the caller claims to be a tax advocacy group requesting pertinent personal information such as a Social Security number. In addition, the IRS aims to inform taxpayers about these scams and contains many resources on its website.

Never Respond to a “Ghost” Preparer Contact

Some telephone contacts regarding IRS claims are conducted by fake tax preparers. They may sound nice at first, but the ultimate goal is often to secure personal information that can be used for various nefarious activities. The pattern for the ghost preparer is to not sign the return, making it appear the taxpayer has prepared the document personally, and then charge an upfront fee for the preparation the preparer refuses to sign. All certified tax preparers are issued official identification numbers, also known as a TPIN, and all prepared returns must be signed by the preparer and their TPIN number included on the form EVEN IF YOU DO NOT PAY FOR THE SERVICE.

Fake tax preparers often:

• Charge a fee with no receipt
• Enter false information to increase a tax return value
• Divert direct deposits to a personal account

This could result in the taxpayer being responsible for a false tax filing as well as being swindled out of any valid tax return, leaving the “ghost” preparer with the assets and no valid form of identification associated with the case. Hang up anytime a tax preparer calls unsolicited and then call the authorities immediately, including filing an IRS ghost tax preparer report Form 14157. The government takes these claims very seriously, and they welcome your help in stopping this practice.

Contact the IRS Following Suspicious Activity

It is always good to understand and follow the requested protocol when being targeted for a tax scam. The Internal Revenue Service suggests:

• Hang up immediately after recording the caller ID number
• Report any information to the Tax Inspector General at the IRS
• Report the incident additionally to the Federal Trade Commission

Contacted individuals should also remember to review their tax account at IRS.gov and call the agency at 800-829-1040 when any discrepancy is found. Always remember that the IRS has a specific protocol when tax collections could be an issue, and it is a legal process that allows all taxpayers an opportunity to appeal any delinquent tax notification or assessment. The government understands that mistakes are made from time to time, and they actually want the record straight as much as the taxpayer.

And always remember to share your experience on social media platforms to help prevent this activity from being extended to other victims. For more tips on dealing with tax scams, visit this IRS tip page and always be on the lookout for tax scams. Also, remember to NEVER email your personal identification information. Email is not secure and should never contain social security numbers, bank account numbers, credit card numbers, driver’s license numbers and so on.