by steve | Dec 21, 2009 | Tax Help, Uncategorized
The mystery of how the IRS selects tax returns for the IRS is not so complicated. There are certain factors that enter in the mix. The IRS can only audit so many tax returns.
President B. Obama has ordered the IRS to intensify its efforts to close the tax gap.
Some returns are selected based on information obtained by the IRS through efforts to identify promoters and participants of abusive tax avoidance transactions.
Some returns are selected for examination on the basis of computer scoring. Computer programs give each return numeric ?scores?. The Discriminant Function System (DIF) score rates the potential for change based on the IRS’s experience with similar returns. This has been going on for 60 years.
The IRS has specially trained personnel that review the highest scored returns and choose those they believe should be audited. They are very experienced personnel.
Large Corporation Annual Audits. These are audited by special groups within the IRS. Dollar amounts are usually over 5 million in sales.
Because of the large size of some corporations and the complexity of their returns the potential for error is great . Many times the companies can bury false deductions.
Information Matching Program
Some returns are examined because payers reports such as Forms W-2 from employers and Forms 1099 interest statements from banks, do not match the income reported on the tax return. Dividends and interest programs are always matched.
Related Examinations
Returns may be selected for audit when they involve issues or transactions involving other taxpayers (i.e. business partners or investors whose returns were selected for examination).
For example, when the IRS audits an S Corporation return it is likely to also examine the individual tax returns of its shareholders. This always happens, two for the price of one.
Also, when the IRS audits a divorced taxpayer who claims a deduction for alimony payments made to an ex-spouse, the IRS will, at a minimum, review the ex-spouse’s return to verify whether or not the alimony payments were included in income.
Local Compliance Projects i.e. Florida, fishing industry or restaurant industry
Area offices may identify returns for examination in connection with local compliance projects. Could be a flea market project.
These projects require high level management approval and deal with areas such as local compliance initiatives, investigation of specific return preparers or specific market segments.
Make sure your return makes common sense, if it does not, fear the reaper.
by steve | Dec 21, 2009 | Tax Help, Uncategorized
There are many reasons why tax returns get audited by the IRS. The DIF score has a lot to do with the reasons. Here are some tips that you need to know to stay away from an IRS audit.
Your chances of being audited by the IRS will be much are greater under the following circumstances:
You have very large amounts of itemized deductions on your tax return that exceed IRS targets. These targets are based on the DIF scores.
You claim tax shelter investment losses on your tax return. These are all reviewed and based on whether or not the shelter even makes sense.
You have complex investment or business expenses on your tax return. Sometimes putting an explanation on the return makes a lot of sense.
You own or work in a business which receives cash in the ordinary course of business.
Your business expenses are large in relation to your income on your tax return. This is based on Gross income and Adjusted Gross income.
A prior IRS audit resulted in a tax deficiency. It has been flagged for a tax audit.
You have complex tax transactions on your tax return.
You are a shareholder or partner in an audited partnership or corporation.
You claim large cash contributions to charities in relation to your income on your tax return and there is no documentation.
An informant has given information to the IRS. Many times spouses or former employees are the source.
by steve | Dec 21, 2009 | Tax Help, Uncategorized
How To Stop an IRS Notice of Federal Wage Levy, 668w. 1-866-700-1040
Former IRS agents and managers can stop the IRS, we know the process!
Has the IRS just sent a Notice of Federal Wage Levy, (Form 668 W) or tax garnishment to your employer?
Now you have a huge IRS tax problem. The IRS collection process allows for the IRS to levy wages for uncollected back taxes.
These IRS garnishments will not go away until you take the proper steps to take care of this situation. Your employer must comply with the federal rules for this IRS wage levy or your employer will be imposed sanctions by the Internal Revenue Service.
It is possible, within days, to get this federal tax levy or garnishment removed and released and your case closed.
HERE IS HOW SIMPLE THE PROCESS IS
* Immediately contact your boss and let them know you have hired a professional company to take care of this IRS problem;
* Make sure all your back IRS tax returns have been filed with IRS, (we can help with this);
* Fresh Start Tax will contact the IRS with a power of attorney so you NEVER have to speak with the IRS on these back tax issues;
* Provide information necessary to prepare an IRS Form 433F – Financial Statement, with supporting documentation (we will help with this);
* We package the documentation, fax it to the IRS, and immediately request that they release the wage levy or wage garnishment and close your case.
Don’t hesitate, each day you wait, the IRS is taking more from you and your family. Call Fresh Start Tax today and we will work for you to remove the IRS wage levy.
You work hard and deserve all of your well earned wages, don’t delay any longer. Call 1 866 700-1040 and get a Fresh Start.
IMPORTANT TIPS YOU NEED TO KNOW:
THIS WAGE LEVY WILL NOT GO AWAY UNTIL ALL OF YOUR TAX RETURNS ARE FILED WITH IRS:
The IRS will not remove any tax levy on wages or bank accounts until all tax returns are filed. If you do not have your records we can secure all your information from the IRS to prepare all back years. Fresh Start Tax can make this happen within days.
THE IRS ALLOWS YOU SOME MONEY DURING THE GARNISHMENT PHASE:
Even though the IRS has sent this wage garnishment or tax levy to your employer, there are certain allowances that the IRS will give to you. A chart will be sent to your employer that allows you basic food monies only. A single taxpayer with one exemption is allowed $179.81 per week in 2009, The IRS will take the rest.
Why did the IRS place this wage levy on me?
The IRS has sent this tax levy or wage garnishment out because the taxpayer did not respond to correspondence from the IRS. The IRS always makes several attempts to contact a taxpayer that owes tax, they have to by law.
Some taxpayers may not receive this information because they have moved or did not actually receive the mailing sent out by IRS. It makes no difference.
Once the IRS notice of levies are sent, they will not be removed until contact has been made with the Internal Revenue Service.
Fresh Start Tax can handle the IRS for you.
How To Stop an IRS Notice of Federal Wage Levy, 668w.
by steve | Dec 21, 2009 | Tax Help, Uncategorized
The National Standards Program
The Internal Revenue Service has set up Collection Standards to help determine the taxpayer’s ability to pay back taxes in a timely, reasonable and efficient manner. The IRS has set up major category items that each taxpayer will use nationwide. These Standards will change from time to time and will be yearly updated by the IRS. You may directly contact us for these updates.
The necessary expense tests is defined as “expenses that are necessary to provide for a taxpayer and their families health, welfare and production of income.”
The National Standards for food, clothing and other items apply nationwide no matter the region. The National Standards amounts account for their family size without at all questioning the amount spent. No documentation is required.
The National Standards allowances for housing and utilities and transportation, are all known as LOCAL STANDARDS. These vary from location to location. In most cases the taxpayer will be given the amount actually spent or the LOCAL STANDARD, whichever is less. Generally the total number of persons allowed for the necessary living expense should be the same as the exemptions found on the individual tax return. Exceptions are allowed. The IRS may determine that the facts of certain cases or situations are inadequate to provide for the basic living expenses. The IRS may allow for actual expenses. They have proved themselves to be very reasonable, but may differ from agent to agent and the type of day they are having.
It is critical that documentation supports a determination when using the national and local standards or actual expenses. The IRS usually requires documentation for the past three months or sometimes more. They will also require bank statements for the last three months.
The National Standards have also been established for MINIMUM allowances for health care and out of pocket expenses. The taxpayers are allowed the standard amount without question of the monies spent. They also allow for the actual medical expenses if substantiated.
* The National Standards for food and clothing are derived from the Bureau Of Labor Statistics and the Consumer Expenditure Survey. These surveys collect information on families and their buying habits. These standards are grossly inaccurate and do not reflect the true facts. However, there is little we can do to change these figures.
* The National Standards for housing and utilities are derived per Census and BLS data that are provided by each State and County Housing and Utilities standards. Included are mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, telephone and cell phone. The tables include five categories for one, two, three, four, and five or more persons in a household.
* The National Standards for Out of Pocket Health Care have been established for out-of-pocket health care expenses including medical services, prescription drugs, and medical supplies (e.g. eyeglasses, contact lenses, etc.).
The table for health care allowances is based on Medical Expenditure Panel Survey data and uses an average amount per person for taxpayers and their dependents under 65 and those individuals that are 65 and older.
The out-of-pocket health care standard amount is allowed in addition to the amount taxpayers pay for health insurance.
* The National Standard for taxpayer’s vehicles consists basically of two different parts. Nationwide figures for monthly loan or lease payments referred to as ownership costs, and additional amounts for monthly operating costs broken down by Census Region and Metropolitan Statistical Area. The ownership cost portion of the transportation standard, although it applies nationwide, is still considered part of the Local Standards.
The ownership costs provide “maximum allowances” for the lease or purchase of up to two automobiles if allowed as a necessary expense. A single taxpayer is normally allowed one automobile.
The operating costs include maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking and tolls.
If a taxpayer has a car payment, the allowable ownership cost added to the allowable operating cost equals the allowable transportation expense. If a taxpayer has a car, but no car payment, only the operating costs portion of the transportation standard is used to figure the allowable transportation expense. In both of these cases, the taxpayer is allowed the amount actually spent, or the standard, whichever is less.
These National Standards are a gross misrepresentation of the average taxpayer and little has been done to help the taxpayers burdened by this. If you click on this link you will find the National Standards:
http://www.irs.gov/individuals/article/0,,id=96543,00.html
We at Fresh Start Tax have found many ways to make the most out of the National Standards.
by steve | Dec 18, 2009 | Tax Help, Uncategorized
Fresh Start Tax lets all our blog friends know about the latest scams they should be made aware of. Here is an alert brought to you by the IRS.
The IRS and Fresh Start Tax warns taxpayers, businesses and individuals to be on the alert for e-mails and phone calls they may receive which claim to come from the IRS or other federal agency and which mention their tax refund or economic stimulus payment. These are almost certainly a scam from scam artists whose purpose is to obtain personal and financial information such as name, social security number, bank account and credit card or even PIN numbers from taxpayers which can be used by the scammers to commit identity theft. The e-mails and calls usually state that the IRS needs the information to process a refund or stimulus payment or deposit it into the taxpayer’s bank account. The e-mails often contain links or attachments to what appears to be the IRS Web site or an IRS “refund application form.” However genuine in appearance, these phonies are designed to elicit the information the scammers are looking for.
The IRS does not send taxpayers e-mails about their tax accounts.
Additionally, the way to get a tax refund or stimulus payment, or to arrange for a direct deposit, is to file a tax return.
Fresh Start Tax reviews all IRS alerts coming out and monitors them for information that needs to go out to all FST followers. This is an important consumer alert.
Remember, the IRS never sends out emails to individuals or businesses, so beware of suspicious e-mails that could lead to Identity Theft.
