Tuesday, May 31, 2011

IRS May Toughen Compliance Checks before Issuing Tax Refunds

Enhanced pre-refund compliance checks would enable the Internal Revenue Service to help confirm taxpayers' identity, quickly and efficiently correct some errors with virtual certainty, and identify and audit some returns before refunds are issued, according to a new government report that fueled a debate in Congress over refundable tax credits.
The report, by the Government Accountability Office, was presented during a hearing of the House Ways and Means Subcommittee on Oversight on Wednesday. A Senate subcommittee also examined taxpayer identity theft during a separate hearing the same day.
Math error checks are among the most beneficial of these checks for both the IRS and taxpayers, the GAO noted. For example, they have the potential to deter billions of dollars in erroneous refunds, especially for refundable tax credits that have increasingly been enacted and that have resulted in significant overclaimed refunds and fraudulent claims.
Taxpayers benefit from pre-refund checks in several ways, including the fact that the IRS identifies those underclaiming benefits.
Last year the GAO reported that the IRS corrected about 7.7 million errors associated with the Making Work Pay credit, including about 60 percent in the taxpayers' favor, meaning that taxpayers received larger refunds (or had lower taxes due) than they had anticipated.
For almost a century, Congress has been expanding the IRS's math error authority, or MEA, on a case-by-case basis. In 2010, the GAO suggested that authorizing the use of MEA on a broader basis with appropriate controls to protect taxpayer rights could help the IRS immediately address compliance problems with newly created tax credits.
In the absence of broader MEA, from 2008 through 2011, the GAO also suggested that Congress expand MEA for more limited purposes.
Longer term, other IRS initiatives, such as matching information returns to tax returns during the filing season and leveraging new paid preparer requirements, could enhance compliance before refunds are issued. One prerequisite, however, would be a major reworking of some fundamental IRS computer systems, the GAO noted.
In 2010, the IRS processed about 137 million individual income tax returns and issued 107 million refunds totaling over $312 billion. The compliance checks it performs before refunds are issued thus could affect millions of taxpayers and billions of dollars in refunds by identifying taxpayers who overclaim or underclaim tax benefits to which they are entitled. Math error authority is just one example of the pre-refund compliance checks that IRS uses. During 2010, IRS sent taxpayers 8.4 million notices for almost 10.6 million math errors identified on their 2009 individual tax returns.
J. Russell George, the Treasury Inspector General for Tax Administration, told the subcommittee that his office had conducted a number of audits that have identified opportunities to reduce improper payments for the Earned Income Tax Credit, the Additional Child Tax Credit, the American Opportunity Tax Credit for college tuition, the Adoption Credit and other credits.
“Based on our review of the various refundable credits, we believe the IRS should require individuals to provide documentation to support eligibility for all refundable tax credits,” he said. “If such documentation is required, the IRS will also need math error authority to deny refundable credits when supporting documentation is not provided.”
However, the hearing also provided an excuse for lawmakers to trade charges over the whole issue of refundable tax credits.
“In the course of less than a decade, improper payments arising from refundable tax credits have cost taxpayers an estimated $106 billion, according to government reports,” said subcommittee chairman Charles Boustany, R-La. “To put this amount of money in perspective, it’s more than the fiscal year budgets of the Departments of Homeland Security, Justice, Treasury, and Transportation – combined. Refundable tax credits not only reduce an individual’s tax liability, they can also result in payments from the government when the credits exceed one’s tax liability; meaning that millions of Americans have been able to eliminate any income tax liability and even get a check back from the government via refundable credits. Not surprisingly, this makes them an attractive target for those willing to claim more than they are legally due or otherwise cheat the system. The problem is so widespread that the Inspector General has even found IRS employees abusing refundable tax credits.”
Democrats on the committee accused Republicans of trying to deprive middle-class families of the tax credits.
“I continue to ask, ‘Who is next?’  ‘Who else is on your list?’” said ranking member John Lewis, D-Ga. “We started the year with seniors and proposals to end Medicare.  The committee then moved to teachers and their pensions, and then to women’s health and the uninsured. And, today, the target is middle-class, working families. In 2009, the tax credits discussed today delivered almost $160 billion to more than 100 million Americans. They helped students pay for college. They helped families care for their children. They helped families adopt children. They helped millions buy homes. They helped make work pay. They helped middle-class families do just a little bit better.”
Democrats noted that in 2009, the refundable tax credits delivered almost $160 billion to more than 100 million American families.
Republicans shot back with accusations that Democrats were defending tax fraud. “Today, in a hearing examining the administration of refundable tax credits, Ways and Means Democrats refused to address the rampant waste, fraud and abuse in the current Tax Code which has led to over $100 billion in improper payments — robbing taxpayers of their hard-earned tax dollars,” they said in a press release.
Democrats followed up with their own “fact check” on votes by Republicans opposing crackdowns on wealthy taxpayers hiding their assets in Swiss bank accounts and on government contractors who hadn’t paid their taxes.

BY MICHAEL COHN, ACCOUNTING TODAY

Wednesday, May 25, 2011

IRS Gives Joplin Area Taxpayers Additional Filing and Payment Relief

ST. LOUIS –– Following the devastating tornado Sunday in the Joplin, Mo., area, the Internal Revenue Service is giving victims additional time to meet their tax obligations.

Individual and business taxpayers in Jasper County now have until Aug. 1, 2011, to file various returns and pay any taxes due. In addition, federal employment and excise tax deposits due on or after May 22 are now due June 6, 2011.

This relief applies to Jasper County victims of the May 22 tornado as well as earlier storms and flooding that began April 19. For any affected taxpayer, a filing or payment deadline falling on or after April 19 and before Aug. 1 is postponed until Aug. 1, 2011. The postponement also applies to other time-sensitive actions required to be performed during this period including the June 15 deadline for making the estimated tax payment for the second quarter of 2011. 

The filing, payment, and deposit deadlines for other Missouri counties affected by recent storms remain unchanged. See IRS.gov for more information.

Tuesday, May 24, 2011

You should still file your Tax Return even if it is late. Here's why...

If you owe taxes and didn’t file your tax return or request an extension by the April 18 deadline, you may face interest on any unpaid federal taxes you owe and a failure-to-file penalty. The IRS will deny a request for an extension that is filed after 
midnight on April 18. However, you should still file your tax return, even if it’s late.

The failure-to-file penalty is 5 percent per month, or part of a month, of the balance due, up to a maximum of 25 percent. If the tax return is more than 60 days late, the minimum penalty is $135 or the balance due, whichever is less.

Interest and penalties add to the total amount you owe. The sooner you file, even if you can’t pay all or some of the taxes due, the less you will owe.

More information about penalty and interest charges is contained in Chapter 1, Filing Information, of IRS Publication 17.

Thursday, May 19, 2011

No Change for Standard Mileage Rate


During the May 12 payroll industry conference call, an IRS spokesperson said that the IRS has no current plans to increase the 2011 standard mileage rate of $.51 per business mile, despite the increase in gasoline prices. There was no mention of the rates for medical/moving at $.19 per mile or charity miles driven at $.14

Wednesday, May 18, 2011

Tuesday, May 17, 2011

‘Tax Lady’ Roni Deutch Closes Firm Amid Allegations

Roni Deutch, who heavily advertised her tax problem resolution services on television, has closed her law firm and surrendered her legal license after a California judge froze her assets.

Roni Deutch
Deutch was sued last August by the California Attorney General for $34 million, charging her with swindling thousands of people who came to her for help with fixing their tax problems with the Internal Revenue Service. Last month, a California judge froze her assets after the Attorney General asked the court to hold her in contempt for shredding millions of documents and diverting hundreds of thousands of dollars in funds from her clients.
The State Bar of California said Thursday that it has initiated disciplinary proceedings against her. Deutch held a press conference last Thursday at the headquarters of her law firm in North Highlands, Calif., to announce the closure of her firm and her financial difficulties, but sounded a note of defiance.
“I am letting you know right now that I am turning in my state bar license after 20 years,” she said. “So I say this to you, State Bar of California, ‘Are you going to come to my building and help my 4,000 active clients? Are you going to do that, State Bar of California? Will you now come and pick up my 45,000 debt files? Will you come and pick those up? Do you really care about my clients, State Bar of California? Never disciplined me for 20 years, approving my policies, practices and procedures. Are you now going to show up and help my clients? The last time I checked, you were unwilling to help any of my clients unless I was dead or in a mental hospital. Those were the only conditions that you were going to show up and help my clients, dead or in a mental hospital.’”
Deutch said her firm had run out of money and owed $10 million. She said she personally owed $5 million and did not have enough money to defend herself in court, according to the Sacramento Bee. Her own attorney has asked to be removed from the case because he hasn’t been paid.
NORTH HIGHLANDS, CALIF. (MAY 16, 2011)
BY MICHAEL COHN, ACCOUNTING TODAY

Monday, May 16, 2011

How to Spot an IRS Impersonation Scheme

The IRS does not send taxpayers unsolicited e-mails about their tax accounts, tax situations, or personal tax issues. If you receive such an e-mail, most likely it's a scam.
IRS impersonation schemes flourish during filing season. These schemes may take place via phone, fax, Internet sites, social networking sites, and particularly e-mail.
Many impersonations are identity theft scams that try to trick victims into revealing personal and financial information that can be used to access their financial accounts. Some e-mail scams contain attachments or links that, when clicked, download malicious code (a virus) that infects your computer or directs you to a bogus form or site posing as an IRS form or Web site.
Some impersonations may be commercial Internet sites that consumers unknowingly visit, thinking they're accessing the genuine IRS Web site, IRS.gov. However, such sites have no connection to the IRS.
If you want to know whether a site is legitimate or you think you have been the victim of fraud, please contact us. We definitely don't want you to get scammed.

Today's WYBSA Golf Tournament at New England Country Club has been POSTPONED until Friday 06/17/11. Join NFS for the $15,000 Hole In One giveaway next month!

Wednesday, May 11, 2011

Tuesday, May 10, 2011

NFS will be giving away $15,000 for a Hole In One Winner!!


NFS will be giving away $15,000 for a Hole In One Winner @ this year's WYBSA Golf Tournament.

On Monday, May 16th 2011, the 2nd Annual Wrentham Youth Baseball & Softball Association Charity Fundraiser Golf Tournament is taking place at the New England Country Club in Bellingham MA. NFS will award $15,000 to the person who sinks a HOLE IN ONE on the Par 3 Hole #4 during the tournament.

In addition to the $15,000 give away on Hole 4, we will be giving away prizes to the 7 closest to the pin  players and also awarding auxiliary prizes for a HOLE IN ONE on one of the other Par 3 holes. These prizes may include a Flat Screen Television, Visa Gift Cards or Golf Equipment.

Lastly, every participant will receive a $50 Gift Card to 100ThingsToBuy.com.

Following the tournament, we will be available during the Dinner, Award Ceremony and Raffle where we have donated a gift certificate for FREE INCOME TAX PREPARATION.

Please join us for this great event!!

Wednesday, May 4, 2011

Monday, May 2, 2011

Stop by the new Art Gallery at Patriot Place and check out some great works by two talented NFS clients - Polo Barrera & Ann Gorbett!!
http://ping.fm/K7CBb