Reporting Fraud to the Internal Revenue Service Question: What can I do if I think someone has filed a 1040 tax return using my social security number? Answer: The IRS has security measures in place to verify the accuracy of tax returns and the validity of social security numbers submitted.
If you receive a notice from the IRS that leads you to believe someone may have used your social security number fraudulently, please notify the IRS immediately by responding to the name and number printed on the notice or letter.
You can contact the Federal Trade Commission (FTC) Identity Theft Hot line toll-free at 877-438-4338 if you suspect someone else is using your social security number, or to secure information on how to prevent identity theft.
If you are an actual or potential victim of identify theft and would like the IRS to mark your account to identify any questionable activity, please complete Form 14039 Identify Theft Affidavit available on irs.gov.
The IRS will act on this for sure, faster than you would think.
If you are one of the unlucky 1% of individuals that get audited every year, chances are there is a little fear and nervousness running through the mind. Without question your very best source of representation will be a former IRS Audit Manager. Our firm Fresh Start Tax is comprised of former IRS Agents, Managers and Instructors. We know everything that will take place and actually conduct a pre audit before the actual audit occurs. Call us at 1-866-700-1040. The Audit Process
An IRS audit is a review/examination of an organization’s or individuals accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate.
How does your return get selected for the Audit Selection?
Selecting a return for audit does not always suggest that an error has been made. Returns are selected using a variety of methods, including: Random selection and computer screening – sometimes returns are selected based solely on a statistical formula. Document matching – when payor records, such as Forms W-2 or Form 1099, don’t match the information reported. Related examinations– returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit. 1.4 million tax returns are selected for mail correspondence alone
Audit Methods used by the IRS
An audit may be conducted by mail or through an in-person interview and review of the taxpayer’s records. The interview may be at an IRS office (office audit) or at the taxpayer’s home, place of business, or accountant’s office (field audit). The IRS will tell you what records are needed. Audits can result in no changes or changes. Any proposed changes to your return will be explained.
How will I be notified of a tax Audit
Should your account be selected for audit, you will be notified in two ways:
By mail, or
By telephone In the case of a telephone contact, the IRS will still send a letter confirming the audit. E-mail notification is not used by the IRS.
What are your right during an Audit?
A right to professional and courteous treatment by IRS employees.
A right to privacy and confidentiality about tax matters.
A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.
A right to representation, by oneself or an authorized representative.
A right to appeal disagreements, both within the IRS and before the courts.
How long will the Audit take?
The length of each audit varies depending on the type of audit, the complexity of items being reviewed, the availability of information being requested, the availability of both parties for scheduling of meetings and your agreement or disagreement with the findings.
Audit Determinations
An audit can be concluded in three ways: No change: an audit in which you have substantiated all of the items being reviewed and results in no changes. Agreed: an audit where the IRS proposed changes and the taxpayer understands and agrees with the changes. Disagreed: an audit where the IRS has proposed changes and the taxpayer understands, but disagrees with the changes.
What Happens When You Agree With The Audit Findings?
If you agree with the audit findings, you will be asked to sign the examination report or a similar form depending upon the type of audit conducted.
If money is owed, there are several payment options available. Publication 594, The IRS Collection process, explains the collection process in detail.
What Happens When You Disagree with the Audit Findings?
A conference with a manager may be requested for further review of the issue or issues. In addition, Fast Track Mediation or an Appeal request may be filed.
Even my own son asks me this question. Question: As a full-time student, am I exempt from federal taxes? Answer: There is no exemption from tax for full-time students. Every U.S. citizen or resident must file a U.S. income tax return if certain income levels are reached. Factors that determine whether you have an income tax filing requirement include:
The amount of your income (earned and unearned),
Whether you are able to be claimed as a dependent,
Your filing status, and
Your age.
If your income is below the filing requirement for your age, filing status, and dependency status, you will not owe income tax on the income and will not have to file a tax return. You may choose to file if you have income tax withholding that you would like refunded to you. For more information on filing requirements refer to Publication 501, Exemption, Standard Deduction and Filing Information.
You may have given your employer a Form W-4, Employee’s Withholding Allowance Certificate, claiming exemption from withholding. To claim exemption from withholding, you generally would have to have had no tax liability the previous year and expect none in the current year. An exemption certificate is good for the calendar year.
Many errors can occur when processing W-2’s and 1099’s. Question: I received an incorrect W-2 form. I can’t get my former employer to issue a corrected W-2? What should I do? Answer: If your attempts to have an incorrect Form W-2 corrected by your employer are unsuccessful and it is after February 15th, contact the IRS toll-free at 800-829-1040.
Helpful hint: An IRS representative can initiate a Form W-2 (PDF) complaint.
A letter will be sent to the employer requesting that they furnish a corrected Form W-2 to you within ten days. The letter advises the employer of their responsibilities to provide a correct Form W-2 (PDF) and of the penalties for failure to do so.
You will be sent a letter that provides instructions and Form 4852 (PDF), Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. The Form 4852 may be used in the event that the employer does not provide you with the corrected Form W-2 in time to file your tax return.
When you call the IRS or visit an IRS Taxpayer Assistance Center (TAC), please have the following information available:
Your employer’s name and complete address, including zip code, employer identification number (if known – see prior year’s Form W-2 (PDF) if you worked for the same employer), and telephone number,
Your name, address, including zip code, social security number, and telephone number; and
An estimate of the wages you earned, the federal income tax withheld, and the period you worked for that employer. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.
We are former IRS Agents, Managers and Instructors who have worked hundreds and hundreds of successful Innocent Spouse Cases. There is a certain format and formula that makes these cases successful. Fresh Start Tax wants to educated you about the Innocent Spouse Program, Separation and Equitable Relief Program.
Innocent Spouse Relief (And Separation of Liability and Equitable Relief)
Many married taxpayers choose to file a joint tax return because of the certain benefits this filing status allows. Both taxpayers are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise as a result of the joint return even if they later divorce. Joint and severe liability means that each taxpayer is legally responsible for the entire liability. Thus, both spouses are generally held responsible for all the tax due even if one spouse earned all the income or claimed improper deductions or credits. This is true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. In some cases, however, a spouse can get relief from joint and severe liability. There are three types of relief from joint and severe liability for spouses who filed joint returns:
1. Innocent Spouse Relief provides you relief from additional tax you owe if your spouse or former spouse failed to report income, reported income improperly or claimed improper deductions or credits.
2. Separation of Liability Relief provides for the allocation of additional tax owed between you and your spouse or former spouse because an item was not reported properly on a joint return. The tax allocated to you is the amount for which you are responsible.
3. Equitable Relief may apply when you do not qualify for innocent spouse relief or separation of liability relief for something not reported properly on a joint return. You may also qualify for equitable relief if the correct amount of tax was reported on your joint return but the tax remains unpaid. Note: You must request relief no later than 2 years after the date the IRS first attempted to collect the tax from you, regardless of the type of relief you are seeking. Not all IRS attempts to collect the tax from you will trigger the two year period for filing a request for relief. Collection activities that may start the two year period are:
(1) The IRS issues a section 6330 notice to you. A section 6330 notice is a notice that tells you that the IRS intends to levy and that you have a right to a collection due process hearing;
(2) The IRS applies your income tax refund against an amount you owed on a joint return for another year for which you seek relief and the IRS informed you about your right to file a Form 8857;
(3) The filing of a suit by the United States against you for the collection of the joint tax liability.
(4) The filing of a claim by the IRS in a court proceeding in which you were a party or the filing of a claim that involves your property. You must meet all of the following conditions to qualify for “innocent spouse relief”:
1. You filed a joint return, which has an understatement of tax, directly related to your spouse’s erroneous items. Any income omitted from the joint return is an erroneous item. Deductions, credits, and property bases are erroneous items if they are incorrectly reported on the joint return.
2. You establish that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement of tax.
3. Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax. To qualify for “separation of liability relief” you must have filed a joint return and must meet one of the following requirements at the time you request relief:
1. You are divorced or legally separated from the spouse with whom you filed the joint return for which you are requesting relief,
2. You are widowed, or
3. You have not been a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857 (PDF), Request for Innocent Spouse Relief.
If, at the time you signed the joint return, you had actual knowledge of the item that gave rise to the understatement of tax, you may not qualify for separation of liability relief. You may qualify for “equitable relief” if you do not qualify for innocent spouse relief or separation of liability relief. Equitable relief is available for additional tax owed because of a reporting error (an understatement) or you properly reported the tax on your return, but you did not pay it (an underpayment). To qualify for equitable relief you must establish, under all the facts and circumstances, that it would be unfair to hold you liable for the understatement or underpayment of tax. In addition, you must meet other requirements listed in Publication 971, Innocent Spouse Relief. How to make this happen
Use Form 8857 (PDF), Request for Innocent Spouse Relief, or a written statement containing the same information required on Form 8857, which is signed under penalties of perjury, must be filed in order to request innocent spouse relief, separation of liability relief, or equitable relief. You may also refer to Publication 971, Innocent Spouse Relief, for more information. If you request relief from joint liability, the IRS is required to notify the spouse with whom you filed the joint return of your request and allow him or her to provide information for consideration regarding your claim. To learn more about innocent spouse relief, you can use the Innocent Spouse Tax Relief Eligibility Explorer at www.irs.gov. Click on “Individuals,” “Tax Information for Innocent Spouses,” and “Explore if you are an Eligible Innocent Spouse.”
If you lived in a community property state and filed as “married filing separate” rather than “married filing jointly”, you might still qualify for relief. Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Refer to Publication 971 for more details.
It is not recommended that you try to resolve this by yourself. Call Fresh Start Tax today. Let former IRS Agents handle this matter for you. Call us at 1-866-700-1040
As former IRS Agents we use to process hundreds of these cases. We have audited many companies and know the best strategies to use because we did this for a living. We have the highest rating given by the Better Business Bureau. 1-866-700-1040, for the best results, call us today.
Form 1099-Misc & Independent Contractors Question: How do you determine if a person is an employee or an independent contractor? Answer is: The determination is complex, but is based on whether the person for whom the services are performed has the right to control how the person performs the services. It is not based merely on how the person is paid, how often the person is paid, or whether the person works part-time or full-time.
There are three basic factors that are relevant to determining worker classifications:
1. Behavioral control
2. Financial control
3. Relationship of the parties
For more information on employer-employee relationships, refer to Publication 15, Circular E, Employer’s Tax Guide and Publication 15-A (PDF), Employer’s Supplemental Tax Guide. If you would like the IRS to determine whether services are performed as an employee or independent contractor, you may submit Form SS-8 (PDF), Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.
Generally you should report your non-employee compensation on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit From Business. You need to pay self-employment tax (comprised of social security and Medicare taxes) on your net earnings from self-employment on Form 1040, Schedule SE (PDF), Self-Employment Tax if you had net earnings from self-employment of $400 or more. Generally, there is no tax withholding on this income as long as you provide your Taxpayer Identification Number to the payer. Thus, you may have been subject to the requirement to make quarterly estimated tax payments. If you did not make timely estimated tax payments, you may be assessed a penalty for an underpayment of estimated tax. Employees pay their half of the social security and Medicare taxes (i.e., FICA tax), as well as income tax withholding, through payroll deductions. Call former IRS Agents at 1-866-700-1040 to help you resolve this problem.
