by Fresh Start Tax | Dec 4, 2013 | Tax Help
IRS to All Employers:
Hire Veterans by Dec. 31 and Save on Taxes
If you plan to hire soon, consider hiring veterans.
If you do, you may be able to claim the federal Work Opportunity Tax Credit worth thousands of dollars.
You must act VERY soon.
The WOTC is available to employers that hire qualified veterans before the new year.
6 Six key facts about the WOTC:
1. Hiring Deadline.
Employers hiring qualified veterans before Jan. 1, 2014, may be able to claim the WOTC. The credit was set to expire at the end of 2012.
The American Taxpayer Relief Act of 2012 extended it for one year.
2. Maximum Credit.
The tax credit limit is $9,600 per worker for employers that operate a taxable business.
The limit for tax-exempt employers is $6,240 per worker.
3. Credit Factors.
The credit amount depends on a number of factors. They include the length of time a veteran was unemployed, the number of hours worked and the amount of the wages paid during the first year of employment.
4. Disabled Veterans.
Employers hiring veterans with service-related disabilities may be eligible for the maximum tax credit.
5. State Certification.
Employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency. They must file the form within 28 days after the qualified veteran starts work. For more information, visit the U.S. Department of Labor’s WOTC website.
6. E-file. Some states accept Form 8850 electronically.
Need more information just check out IRS.gov.
by Fresh Start Tax | Dec 3, 2013 | Tax Help
Report for TAXPAYERS
Identity theft continues to be a serious and growing problem which has a significant impact on tax administration.
Undetected tax refund fraud results in significant unintended Federal outlays and erodes taxpayer confidence in the Federal tax system.
review
This review is a follow-up to a July 2012 TIGTA audit report, There Are Billions of Dollars in Undetected Tax Refund Fraud Resulting From Identity Theft (Reference No. 2012-42-080).
The overall objective of this review was to determine whether the IRS has improved its programs and procedures to identify and prevent fraudulent tax refunds resulting from identity theft.
WHAT TIGTA FOUND
Our review found that expanded identity theft detection efforts are helping identify fraudulent tax returns. However, billions of dollars in potentially fraudulent refunds continue to be paid.
Our analysis of Tax Year 2011 tax returns identified approximately 1.1 million undetected tax returns filed using a Social Security Number that have the same characteristics of IRS-confirmed identity theft tax returns.
Potentially fraudulent tax refunds issued total approximately $3.6 billion, which is down by $1.6 billion compared to the $5.2 billion TIGTA reported for Tax Year 2010.
In addition, TIGTA expanded its Tax Year 2011 analysis to include tax returns for which the primary Taxpayer Identification Number on the tax return is an individual Taxpayer Identification Number (ITIN).
TIGTA identified more than 141,000 Tax Year 2011 tax returns filed with an ITIN that have the same characteristics as IRS- confirmed identity theft tax returns involving an ITIN.
Potentially fraudulent tax refunds issued for these undetected tax returns totaled approximately $385 million.
Lastly, the IRS has still not taken actions to prevent multiple tax refunds from being deposited to the same bank account. This continues to provide identity thieves with an easy method to obtain fraudulent tax refunds.
WHAT TIGTA RECOMMENDED
TIGTA recommended that the Commissioner, Wage and Investment Division:
1) deactivate ITINs assigned to individuals prior to January 1, 2013, who no longer have a tax filing requirement in an effort to reduce tax filing fraud and
2) continue to analyze the characteristics of identity theft tax returns, including using the characteristics of questionable ITIN application data to expand identity theft filters.
IRS management agreed with TIGTA’s recommendations. An implementation team is addressing the deactivation process for ITINs issued prior to 2013 and is developing an enterprisewide process to accomplish that objective.
In addition, during the 2012 and 2013 Filing Seasons, the Taxpayer Protection Program identified opportunities for improvement to the filter processes and implemented changes that improved their performance and effectiveness.
The IRS plans to continue to evaluate the feasibility and impact of changes to the Dependent Database filters and ITIN Real-Time System.
by Fresh Start Tax | Dec 3, 2013 | Tax Help
IRS Penalties on Filing Compliance Form 5471
Need help with IRS penalties?
Contact us today. We are comprised of tax attorneys, CPAs and former IRS agents, managers and tax instructors.
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One of the major trends challenging the IRS is accelerating globalization.
The overall objective of the review was to determine whether the IRS has improved its penalty-setting process to promote filing compliance for entities with Form 5471 reporting requirements.
Overall, controls ensured that systemic penalties for late‑filed Forms 5471 were properly assessed and compliance was improved for many taxpayers.
While a standardized framework was not used to develop a pilot program for systemically assessing late‑filed Form 5471 penalties, the IRS objectives to enhance revenue and improve taxpayer compliance were met.
However, controls are insufficient to ensure the proper abatement of systemically assessed penalties on late‑filed Forms 5471.
Specifically, in a statistically valid sample of 93 cases, the penalties were incorrectly abated in 40 cases. Not good news.
Total abatement’s for these 40 cases amounted to $1.75 million, resulting in approximately $31 million in incorrect abatement’s when projected to the population.
In addition, the IRS did not properly process eight filing extensions.
This led to $6.4 million in unnecessary late‑filed Form 5471 penalty assessments ultimately being abated, resulting in approximately $11.6 million in incorrect assessments when projected to the population.
Further, in 80 of the 93 sampled cases, IRS employees did not adequately document their decisions to abate these penalties.
TIGTA recommended that the IRS:
1) conduct a study to determine if the automated late‑filed Form 5471 penalty‑setting process should be expanded;
2) provide refresher training to employees and their managers on the importance of documenting penalty abatement request decisions;
3) require managers to review all late‑filed Form 5471 penalty abatement’s; and 4) ensure that filing extension requests received with a payment are properly coded and timely processed.
If you need help with IRS penalties on filing compliance in any tax issue contact us today for a free initial tax consultation.
by Fresh Start Tax | Dec 3, 2013 | Tax Help
TIGTA Finds Improvements in IRS Oversight of Information Reporting Related to Foreign Corporations
The Internal Revenue Service (IRS) has made improvements in systemically assessing penalties on U.S. taxpayers who are late in fulfilling their tax reporting requirements regarding their involvement in certain foreign corporations, according to a new report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).
However, the IRS must make improvements in its controls to ensure the proper abatement of penalties when taxpayers provide a reasonable cause for the abatement.
The law requires a U.S. citizen or resident alien to furnish information with respect to certain foreign business entities. Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, is used to comply with the law and regulations.
TIGTA conducted its review to determine whether the IRS has improved its penalty-setting process to promote filing compliance for entities with a Form 5471 information reporting requirement.
Overall, TIGTA found IRS controls ensured that systemic penalties for late-filed Forms 5471 were properly assessed and that the majority of the taxpayers sampled timely filed their Forms 5471 the following year.
However, controls are insufficient to ensure the proper abatement of systemically assessed penalties on late-filed Forms 5471. Specifically, in a statistically valid sample of 93 cases, penalties should not have been abated in 40 cases.
Total incorrect abatement’s for these 40 cases amounted to $1.75 million, which equates to approximately $31 million in incorrect abatement’s when projected to the population.
In addition, the IRS did not properly process eight automatic filing extensions, which led to $6.4 million in unnecessary late-filed Form 5471 penalty assessments ultimately being abated. When projected to the population, there was approximately $11.6 million in incorrect penalty assessments.
“One of the major management challenges facing the IRS is accelerating globalization,” said J. Russell George, Treasury Inspector General for Tax Administration. “The increased use of late-filed penalties could be an effective tool to help improve compliance with international information return filing requirements.”
TIGTA recommended that the IRS:
1) conduct a study to determine if the automated late-filed Form 5471 penalty-setting process should be expanded;
2) provide refresher training to employees and their managers on the importance of documenting penalty abatement request decisions;
3) require managers to review all late-filed Form 5471 penalty abatement’s; and 4) ensure that filing extension requests received with a payment are properly coded and timely processed.
In their response, IRS officials agreed with all of TIGTA’s recommendations.
IRS officials stated that they have taken steps to implement two corrective actions and plan to take remaining corrective actions in the future.
by Fresh Start Tax | Dec 3, 2013 | Tax Help
IRS Audit Adjustment – Call Former IRS Auditors – CP22
Has the IRS made changes to your tax return?
Do you owe money on your taxes as a result of these changes.
How to get help professional tax help
You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).
Call us today we are comprised of tax attorneys, certified public accountants, and former IRS agents, managers and taxes instructors.
We have over 60 years of combined IRS work experience in the local, district, and regional tax offices of the IRS.
We have on staff former IRS auditors, IRS audit managers in IRS appellate agents. We are the affordable tax experts for IRS tax audit problems
For those of you who a self doers: What you need to do
Read your notice and audit report carefully. The letter will explain why you owe money on your taxes.You should:
- Pay the amount owed by the date on the notice’s payment coupon.
- Make payment arrangements if you can’t pay the full amount you owe.
- Contact the IRS if you disagree with the change(s) we made.
- Correct the copy of your tax return that you kept for your records.
Other tax options:
Review the following documents from the IRS
- Publication 1, Your Rights as a Taxpayer
- Publication 3598, What You Should Know About the Audit Reconsideration Process
- Publication 3498-A, The Examination Process (Examinations by Mail)
- Notice 746, Information About Your Notice, Penalty and Interest
- Form 9465, Installment Agreement Request
Answers to Frequently Asked Questions
- What should I do if I disagree with the changes you made?
If you’ve information relevant to your audit that we’ve not already considered and you’ve not already paid your bill in full, you may request an Audit Reconsideration. Refer to Publication 3598, What You Should Know About the Audit Reconsideration Process for additional information.
If you’ve already paid the amount due in full, you must file a formal claim using Form 1040X, Amended U.S. Individual Income Tax Return.
If you don’t have additional information to provide, but you disagree with the results of your audit, you may appeal your case to the Appeals Office of the IRS. Refer to Publication 5, Your Appeal Rights and How To Prepare a Protest If You Don’t Agree for additional information.
- What happens if I can’t pay the full amount I owe?
You can arrange to make a payment plan with us if you can’t pay the full amount you owe.
- Am I charged interest on the money I owe?
If you don’t full pay the amount you owe by the date on the payment coupon, interest will accrue on the unpaid balance after that date.
- Will I receive a penalty if I can’t pay the full amount?
Yes, you’ll receive a late payment penalty. You can contact us at the number listed on your notice if you’re unable to pay the full amount shown in your specific notice because of circumstances beyond your control. Contact us by the due date of your payment and, depending on your situation, we may be able to remove the penalty.
- Can I set up a payment plan?
Yes. Call the toll-free number listed on the top right corner of your notice to discuss payment options or check out more information on payment options and how to make a payment arrangement.
There are other options, such as paying by credit card. Note: There may be a fee to pay by credit card.
- What if I need to make another correction to my account?
You’ll need to file Form 1040X, Amended U.S. Individual Income Tax Return.
You may qualify for innocent spouse relief.
To request relief, you must file Form 8857, Request for Innocent Spouse Relief no later than 2 years after the date on which the IRS first attempted to collect the tax from you. Refer to Publication 971, Innocent Spouse Relief for additional information.
Call us today for free initial tax consultation about your IRS audit adjustment.
You will speak directly to a former IRS agent, CPA, or tax attorney.
We are one of the most affordable firms in dealing with IRS tax problem resolutions.
IRS Audit Adjustment – Call Former IRS Auditors – CP22
