Fight Back Against Scams

It’s tax season, which means that tax scams are on the rise. It’s likely you – or someone you know – has received a suspicious email, phone call or even snail mail and wondered “can this be real?” If you answered “no,” congratulations! You just saved yourself a mess and headache. But unfortunately, thousands of Americans lose millions of dollars as well as their personal information to tax scams each year, according to the IRS.

It’s why the IRS regularly issues “Scam Alerts” to warn taxpayers against the potentially damaging scams. What’s even more alarming is that rip-off artists working to rid you of your money or your identity are finding increasingly clever ways to reach into your pocket. In addition to ordinary taxpayers, scams now target tax professionals, human resource/payroll departments and others. Nearly any entity that might possess your private information can be subjected to a tax scam.

Most recently, an IRS Scam Alert warned of a complex scam where criminals steal client (i.e., taxpayer) data from tax professionals and then file false tax returns under these clients’ names, using the clients’ real bank accounts for refund deposits. Scammers then use a variety of different methods to take back the money once it’s deposited – sometimes even posing as IRS officials and threatening the victims. You can read the full Scam Alert here.

So, what can you do to protect yourself? The first step is to know how the IRS operates and to become somewhat familiar with the types of scams out there (although they are constantly changing and adapting): tax tips tray

IRS protocols. The Internal Revenue Service will NEVER initiate contact with taxpayers by email, text message or social media platforms to request personal or financial information. If this happens to you, it’s a surefire sign someone is trying to scam you.

Deceitful practices. As mentioned above, tax scams come in all kinds of forms – and are delivered to victims in snail mail, email, text message or phone calls. Don’t be fooled by professional looking letterheads and logos or official sounding tax issues raised in the communication. If you have any doubt at all as to its authenticity, do not respond in any way and contact someone you trust to verify the communication.

Variety of scams. As the earlier example demonstrates, scam artists are a clever bunch. There are a variety of ways they will try to wriggle personal information out of you. Whether by asking you to provide private information (“phishing”), impersonating IRS personnel via telephone calls or directing you to official looking websites that infect your computer with malware (making you vulnerable to hacking), criminal scammers will stop at nothing to steal your money.

So consider this a primer to the basics of tax scamming you need to know to protect yourself and your private information. Remember that the IRS will not contact you and request private information arbitrarily via email or text. And finally, always say no to information requests that you are not absolutely, 100 percent positive are authentic.

To get more information about tax scams and how to identify them, read this comprehensive IRS Tax Scam Alert.

Unenrolled Return Preparers Win Again

Tax practitioners with unlimited representation rights before the Department of Treasury, such as Enrolled Agents, CPAs and Attorneys, are clearly engaging in “practice before the Internal Revenue Service” in the course of their work. As such, they are regulated by Circular 230, which is in turn enforced by the Office of Professional Responsibility. For unenrolled return preparers, however, the definition of “practice before the IRS” is a lot less clear.

IRS Red Light_smallFor nearly a decade, the IRS has worked to take a stronger role in the oversight of tax practitioners, specifically looking to bring unenrolled tax preparers under its authority. In 2017 the IRS suffered yet another blow in this effort when the courts decided a three-year old case.  On September 8, 2014, plaintiffs Adam Steele, Brittany Montrois, “and a Class of More Than 700,000 Similarly Situated Individuals and Businesses” filed a class action suit against the federal government seeking to recover allegedly unlawful license fees paid to the Internal Revenue Service (IRS)(Erbs, Forbes, 6.5.17).

The 2017 decision in Steele et al. v. US by Judge Lamberth upheld the IRS’ right to use the PTIN system to register and track tax return preparers.  However, Judge Lamberth stated that the IRS could not charge a fee for the issuing PTINS because the PTIN system did not constitute a “service or thing of value.” In fact, the Court argued that the opposite may be true: the real benefit of the PTIN “inures to the IRS, who, through the use of PTINs, may better identify and keep track of tax return preparers and the returns that they have prepared.” (Erbs, Forbes, 6.5.17).

Not only was the decision the latest example of fallout from the highly publicized Loving decision of 2014, which struck down the IRS’ attempt to regulate tax preparation, it comes at a steep cost. The decision states that the IRS must provide a full refund for PTIN fees paid to each class member. Estimates indicate the amount to be as high as $175,000,000.

Despite defeat the IRS seems committed to bringing more oversight to the tax preparation industry. On IRS.gov the IRS continues to emphasize the Annual Filing Season Program (AFSR), an initiative that aims to recognize the efforts of non-credentialed return preparers who aspire to a higher level of professionalism. Moreover, beginning Jan. 1, 2016, there were changes to the representation rights of return preparers.

The IRS goes on to make the point that attorneys, CPAs, and enrolled agents will continue to be the only tax professionals with unlimited representation rights, meaning they can represent their clients on any matters including audits, payment/collection issues, and appeals.

So while the unenrolled tax preparer community continues to prevail in court, when it comes to tax preparation clearer lines are being drawn on what roles these tax pros can play in the system. Unenrolled tax preparers with clients that have audit, collection or appeal issues should help those taxpayers find a competent tax professional with unlimited representation rights.

Pay Your Taxes, Protect Your Passport

If you’re planning on taking an international trip anytime soon, you may want to make certain your taxes are paid in full – or that you have entered into a payment agreement with the Internal Revenue Service for any back taxes owed. If not, your passport could be at risk.

That’s the message the IRS delivered in January when it announced implementation of new procedures affecting individuals with “seriously delinquent tax debts.” According to an IRS press release, the new enforcement policy impacts primarily those owing $51,000 or more in unpaid back taxes for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired – or the IRS has issued a levy.

“This enforcement action has been in the works for a number of years and is the result of legislation passed in 2015 that requires the IRS to notify the State Department of taxpayers owing a seriously delinquent tax debt,” said Brian Biffle, president of 20/20 Tax Resolution. “However, many taxpayers impacted by this legislation may not be aware of it or may not understand the serious implications of it.”

US PassportFailure to pay unpaid taxes or create a payment plan could lead to denial of a passport application or even denial to renew a passport, according to the IRS. In some extreme cases, the FAST Act – which was signed into law under the Obama Administration in December 2015 – requires the State Department to revoke a passport for unpaid taxes.

“This is very serious for those who travel internationally, especially for a person whose business depends upon international travel,” Biffle said. “To be absolutely certain you are safeguarded from these enforcement actions, taxpayers that owe unpaid taxes should be certain to come forward and deal with any debt they might owe.”

This same legislation, known as the “FAST Act” (for “Fixing America’s Surface Transportation” Act), details the ways travelers can avoid the new passport constraints:

  • Pay any unpaid tax debt in full
  • Pay the tax debt under an approved installment agreement
  • Pay the tax debt under an accepted offer in compromise
  • Pay the tax debt under the terms of a settlement agreement with the Department of Justice
  • Having requested or have a pending collection due process appeal with a levy
  • Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief

According to the IRS press release on the matter, the following taxpayers won’t be at risk of this new enforcement program:

  • Any taxpayer who is in bankruptcy
  • Any taxpayer identified by the IRS as a victim of tax-related identity theft
  • Any taxpayer whose account the IRS has determined is currently not collectible due to hardship
  • Any taxpayer located within a federally declared disaster area
  • Any taxpayer who has a request pending with the IRS for an installment agreement
  • Any taxpayer who has a pending offer in compromise with the IRS
  • Any taxpayer who has an IRS accepted adjustment that will satisfy the debt in full

To review the full IRS press release, visit the IRS website.

[INFOGRAPHIC] NEW YEARS RESOLUTION: PLAN NOW FOR 2018

According to IRS data, nearly one third of Americans wait until the last minute to file their taxes. With numbers that high, it’s no surprise that our clients are often a part of that percentage. The delay is primarily due to insufficient preparation – and the dread that comes from facing all the paperwork scattered throughout your office. But it doesn’t have to be this way.

Here are the most important things you should resolve to do NOW to ensure you are setting yourself up for a successful year.

Questions about your unique situation? Learn more about ways we can help or feel free to contact us at any time!

2017 Year in Review: Top Tax News

No matter your perspective on the recent passage of tax reform, there’s no question it is the biggest tax story of the year – and perhaps of the decade. The estimated $1.5 trillion bill is being touted as the savior of the middle class and simultaneously denounced as just another exercise in trickle-down economics. Time will tell how the expansive bill shakes up the economy, but with provisions impacting everything from health care to the standard deduction, the reform is sure to impact just about every American in some way.

Business man holding TAX on blurred abstract background

The rest of 2017’s tax stories are not quite as dramatic, but important nonetheless. Here’s a rundown of the top tax news of the year:

  • Employment taxes: The IRS stepped up efforts to combat delinquent employment taxes in the wake of a scathing report in May from the Treasury Inspector General for Tax Administration. The IRS watchdogs reported that the number and size of payroll tax violations is going up, and IRS penalties alone have not been enough to stop the trend. Although the willful failure to remit employment taxes is a felony, there have historically been fewer than 100 criminal convictions per year.
  • Use of private debt collectors: In June it was announced that the IRS began using private debt collectors to try and recoup overdue money owed the government. The IRS program engages four private-sector collection agencies to pursue the toughest debt. Generally these are cases where money has been owed for multiple years and the case is not currently being worked by federal employees.
  • Tax reform impact on delinquent taxes: A change in pass-through taxation, which impacts taxpayers who have some or all of their business income taxed on their individual return, could aid S corporations, LLCs, partnerships and sole proprieterships. As a result, these entities might have fewer challenges meeting their tax obligations. However, tax reform is not expected to have a major impact on tax resolution needs. As always, “life happens” so some people will owe – and some of those people will inevitably need tax resolution services.

The biggest story of the year may be that nothing really changes. The need to have a solid tax plan in place for individuals and businesses is still essential. Be certain to plan ahead for tax obligations, monitor your business throughout the year to guard against revenue ebbs and flows – and make certain you always have a plan to pay.

Happy New Year to you and yours, and best wishes for a profitable 2018!

Top Five Concerns of People Facing IRS Action

You’ve received a letter from the IRS telling you there’s a problem with your taxes. You’re not entirely clear on what the letter means. Yet you are sweating a little. You’re nervous about what happens and what steps you should take next. You’re anxious and are tempted to ignore it all.

Here’s your first step: DO NOT IGNORE THE IRS NOTICE. For your next step, read the following concerns that 20/20 most often hears from clients calling our office for the first time. With our 19 years of experience helping people overcome tax difficulties, we’ve heard just about every concern. Here are the top five concerns common to our clients. Taking Notes

1. Aggressive enforcement and liens

People who speak with 20/20 agents overwhelmingly express fear that the IRS wants payment immediately and by any way possible. Taxpayers want protection from aggressive enforcement actions like bank levies, accounts receivables levies, wage garnishments and asset seizure. While every person’s case is unique, we have a variety of tools we can use to intercede and ensure that these extreme IRS actions are avoided. In nearly every case, we are able to use these tools to give clients the time and space they need to establish compliance and form a strategy to meeting their tax obligations.

2. Difficulty dealing with or communicating with the IRS

It’s not surprising that the second most-frequent concern we hear is that resolving this issue will require inordinate amounts of time, effort and frustration. Who hasn’t sat on hold trying to reach an account service representative? Taxpayers envision a customer service nightmare multiplied tenfold by government inefficiency. Because we work with the IRS all the time, we’re familiar with the agency’s communications processes and we know how to reach the right person to get the right information. We take over communication and do it for the taxpayer, freeing them up to run their business – and their life.

3. Revenue officer showing up at place of business and employees or others finding out about liability

While the IRS is stepping up enforcement and collection efforts of unpaid or delinquent taxes (particularly employment taxes), the agency does work to respect and protect a taxpayer’s privacy. However, in a busy office where documentation and information is shared widely, it’s entirely possible that some news about tax issues may filter out to others. But any employee or other individual will feel less anxious when they know a qualified, experienced tax resolution company like 20/20 is working on the case. The alternative is to have employees or others worry that nothing is being done to manage the liability.

4. Debt to IRS growing out of control (penalties and interest accrual)

There are very few ways to avoid having to pay interest when a tax obligation is delinquent. However, 20/20 can make certain that all obligations, interest and even any penalties will be the least amount allowable under the law. The bottom line: Doing something to resolve the situation is always better than doing nothing.

5. Getting a good and manageable resolution.

Finally, 20/20 clients are worried about achieving a fair, manageable resolution that won’t break the bank and will alleviate their worries. Fortunately, we’ve been helping clients achieve this goal for almost 20 years so we can say with confidence that we can help most taxpayers. We’ll use our experience to obtain the best resolution available under your specific circumstances.

While reactions to potential IRS action vary, it’s fairly typical for clients to feel some or all of the above concerns. Some people seem unfazed and are not frightened of the IRS at all. Typically, this reaction comes from taxpayers who have dealt with the IRS previously. The strongest fear many people experience is that others (employees, spouses, friends, etc.) will discover the problem. There’s a certain stigma about owing money to IRS – and they worry what others will think.

But the truth is many people experience these types of problems and it doesn’t indicate any lack of character. Taxes are a complicated issue – and running a business is always challenging. What’s important is recognizing when you need help in order to keep any problems from becoming overly burdensome. That’s precisely why we exist.

Summertime Tax Tip: Amending a 1040 Return

As the IRS states, the tax code is a complex set of laws affecting virtually every American individual and business. Last year the IRS processed over 244 million tax returns and other documents. The volume is a tribute to the voluntary tax system as well as the IRS workforce.

Undoubtedly, however, the complexity and volume of our tax system means that errors are almost unavoidable. As representation experts we do our best to find and correct those errors made by the IRS. But, that’s just one side of the equation. Every year countless taxpayers ask us what to do if they discover an error on a return that was already filed. The short answer is to not panic and correct the mistake.

2020 Summer Tax Tip_FINAL_PNG

Questions about your unique situation? Learn more about ways we can help or feel free to contact us at any time!

To download a high-resolution version of this infographic, please click here

 

Employment Tax Noncompliance Reaching Historic Numbers

As political leaders in Washington consider dramatic cuts to federally funded programs and agencies, billions in employment taxes, interest, and penalties has gone unpaid due in some part to decreasing efforts from the IRS to pursue and collect from the growing number of delinquent employers.

That’s the assessment of experts at 20/20 Tax Resolution, a tax resolution firm that specializes in helping business owners manage and resolve tax obligations when they’ve fallen behind. According to IRS data, nearly $46 billion in unpaid employment taxes and penalties were left unaccounted for in fiscal year 2015. Yet, five consecutive years of IRS budget cuts have reduced the agency’s ability to manage enforcement caseloads.

“Employers are often under tremendous financial pressure to meet tax obligations,” said David Miles, vice president at 20/20 Tax Resolution. “When they fall behind, either through financial necessity or willfully, it’s important that the IRS possess the resources to work with employers to rectify any shortfalls.” IRS Building Sign

According to the federal budget proposed by the Trump Administration in early March, the IRS budget would be reduced to $9.65 billion, a 14.1 percent cut for the fiscal year that begins in October and would mark the agency’s sixth consecutive year of budget cuts. The proposed 2017 cut goes against the stated desires of Treasury Secretary Steven Mnuchin, who believes the IRS needs more money and staff to fulfill its mission and increase revenue. For taxpayers seeking to meet their tax obligations, the proposed IRS budget cuts would result in fewer personnel available to resolve issues, slower response times and ultimately more frustration.

“It has been shown that every dollar of IRS funding returns four dollars in revenue – and as much as $10 if invested in enforcement activities,” said Miles. “Yet additional cuts to IRS funding will further erode the agency’s capabilities to realize this revenue generation.”

“A properly funded IRS provides necessary resources to garner faster, more efficient and more accurate resolutions to employer tax issues,” Miles said. “To reiterate, when fewer resources are available, the result is a reduction in decision makers, longer wait times and slower resolutions, making employers focus longer on their tax troubles and potentially even dissuading some employers from complying voluntarily.”

“Egregious” employer tax noncompliance (defined as 20 or more consecutive quarters of non-payment) has tripled over a 17-year period, according to IRS records. When collection against an employer is unsuccessful, the IRS pursues the individuals responsible for the company by assessing the Trust Fund Recovery Penalty (TFRP). In FY 2015, the IRS assessed the TFRP against approximately 27,000 responsible persons – 38 percent fewer than just five years before as a result of diminished revenue officer resources.

“It becomes a challenge for employers to seek resolution when the resources required to remedy tax issues are not available or are exceedingly difficult to manage,” Miles said. “For the sake of taxpayers and the nation as a whole, a fully supported IRS offers the best way to help employers meet their obligations.”

IRS Collections Going Private this Month. Be Wary of Tax Scams.

After months of conversation, and criticism, taxpayers across the country will finally start hearing from private debt collectors starting this month. If you are unfamiliar with this initiative, please take a moment to read through our blog post “IRS Turning to Private Debt Collectors.” This piece provides a great overview of what the program entails.

Interestingly, the conversation about the IRS’ third go-around with private debt collection has really shifted from its past failures to how the IRS will separate itself from the many IRS scammers passing themselves off as a private collection firm.  To do its part to combat IRS scammers the IRS has, in the past, leaned heavily on the fact that it does not make outbound phone calls to collect taxes. That will change under private debt collection.

It has been announced that private debt collectors are only going to be assigned cases that are inactive. This means that these entities are going to be calling taxpayers that have not heard from the IRS in quite some time making the potential risk of confusion about who is calling much higher. The IRS recognizes the issue and has given advice to taxpayers to help distinguish the legitimate private debt collectors from others.

According to a recent IRS announcement, IRS Commissioner John Koskinen explains, “Here’s a simple rule to keep in mind. You won’t get a call from a private collection firm unless you have unpaid tax debts going back several years and you’ve already heard from the IRS multiple times.” He continues with, “The people included in the private collection program typically already know they have a tax issue. If you get a call from someone saying they’re from one of these groups and you’ve paid your taxes, that’s a sure sign of a scam.” The concern is that the Commissioner’s explanation may not resonate with many taxpayers.  As a result, if scammers attempt to leverage private debt collection into a new tactic, taxpayers may not know who is who.

As expected, the IRS is urging all taxpayers that owe back taxes to work through a resolution sooner rather than later.  And for those taxpayers unsure of where they stand with IRS the Commissioner suggests that they take the necessary steps to determine what taxes, if any, remain unpaid.

If you find yourself unsure about what you owe, contact us today.

*Want to read more? Click here to check out the latest IRS announcement.

[Infographic] 5 Common Business Owner Payroll Myths: Debunked

When it comes to running a business, ensuring that payroll obligations are met, both to employees and all applicable taxing authorities, doesn’t come without challenges. While there are a wide variety of resources available to help businesses of all sizes manage their payroll obligations, perhaps no other challenge can be as “taxing” (particularly for small- to medium-sized companies) as ensuring that these obligations are met.

If you own a company, take some time to familiarize yourself with some of the most common myths many business owners believe when addressing their payroll tax concerns.

 

Five Common Payroll Myths Debunked

Questions about your unique situation? Learn more about ways we can help or feel free to contact us at any time!

To download a high-resolution version of this infographic, please click here