What a year we just experienced! The nation enjoyed record-low unemployment nationwide, though skyrocketing housing costs impeded many people’s prosperity. Despite what some economists called ominous signs of impending recession, the economy continued to soar. We saw the return of “Roseanne” to TV in a stunning ratings success (and just as quickly witnessed her downfall and departure). Politics continued to dominate our attention as voters across the nation decided to switch parties in the U.S. House of Representatives, setting the stage for divided government in 2019. Through it all we enjoyed trying the dance phenomenon “The Floss” – though most adults failed miserably. And audiences flocked to theaters in droves to see “Black Panther,” making it one of the highest-grossing movies of the year.
As the world swirled about, 20/20 Tax Resolution remained focused on all things taxes. There was a lot of tax news over the past 12 months. Much of it was reported in our 20/20 blog, but it was nearly impossible to update readers on everything that occurred (and who’s interested in reading endless accounts of tax news, besides us?). To save you some time, we compiled the following Top Tax Stories of the year just past, which provide a preview of what tax news to watch for in 2019.
Deficit soars, tax cuts blamed
The tax bill signed into law by President Trump in December 2017 took effect in a variety of ways last year but one impact almost certainly resulted in soaring U.S. deficits, according to data from the Congressional Budget Office. Although the U.S. Treasury reported in October that revenues grew in 2018 by nearly $14 billion, that doesn’t tell the whole story. Under the previous tax policy replaced by the new GOP law, revenue was projected to be $3.5 trillion. Under the new law revenues were $202 billion less, which could not accommodate the $127 billion in new spending last year – increasing the deficit in the process.
And speaking of tax cuts, you likely took home more money
As a result of the GOP tax law, about 90 percent of wage earners saw an increase in their paycheck in 2018 upon the release of the years federal tax withholding tables in February. Tax tables determine how much money employers withhold from an employee’s paycheck under the Tax Cuts and Jobs Act, as well as reflecting other changes that impact the repealed personal exemption and an increase in the standard deduction. However, the extra cash may not be all rosy news for some taxpayers, as the reduction in withholding might impact tax refunds come tax season. 20/20 advises taxpayers to be aware of these changes to ensure they’re not caught off guard by a lower than anticipated refund or even the possibility of a tax liability due to the new provisions.
Funding cuts continue to impact IRS
The rates at which the IRS audits tax returns continued its multi-year decline, particularly among high-income individuals and large corporations. Primarily due to deep cuts in IRS funding and staffing that began in 2010, the lack of resources became even more critical as the agency began implementing and enforcing the new tax law, with no new enforcement resources allocated. At $4.9 billon, the IRS’s enforcement funding was 23 percent below its 2010 level in inflation-adjusted dollars.
Collection agencies bully taxpayers, IRS looks the other way
As reported in 20/20’s June 13th blog post, the National Taxpayer Advocate’s annual report to Congress strongly suggested that private debt collectors were bullying taxpayers into payment plans that might not suit their needs. Private agencies are prone to setting up payment terms that fall within the streamlined guidelines that don’t require taxpayers to submit financial information. However, these are not always the best option although they are among the easiest solutions to apply. The advocacy group said the IRS should do more to protect taxpayers from these practices.
Tax scams explode exponentially
We told you about the explosion of tax scams in a May blog post that detailed the two biggest types of tax scams proliferating across the country this year: one which preys on those owed refunds and the second aimed at those with delinquent tax obligations. More recently, the IRS warned taxpayers in early December to be on the watch for phishing scams following a surge of new sophisticated email scams seeking to steal tax data, allowing identity thieves to abscond with an individual’s tax refund. According to the IRS, there has been a recorded 60 percent increase in nefarious, fraudulent email schemes in 2018.
International travelers with tax debt face passport problems
We told you in January about new IRS procedures affecting international travelers with “seriously delinquent tax debts.” A new enforcement policy took effect this year that would put the passports at risk for travelers who owe $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. So the message is clear: Pay up or stay home.
And finally, we would be remiss if we didn’t reflect once again on the occasion of 20/20’s 20th Anniversary, which we commemorated all year long with a series of blog posts and internal celebrations. As we move forward into our 21st year, we remain grateful for the opportunity to serve the thousands of clients we’ve helped throughout the years and we continue to vow to provide the most effective, most professional and most compassionate assistance to taxpayers everywhere who need help resolving their tax issues. Together, let’s make it a fantastic 2019!
Happy New Year!