Taxes

We have addressed the first seven Rights that taxpayers have according to the Taxpayer Bill of Rights.  As we conclude this mini-series, we will look at the final three Rights.

THE RIGHT TO CONFIDENTIALITY.  Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law.  Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

No different than when you visit a medical provider and you sign the HIPPA documents, your information on file with the IRS is confidential and not permitted to be shared without authorization.

THE RIGHT TO RETAIN REPRESENTATION.  Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS.  Taxpayers have the right to see Assistance from a Low Income Taxpayer Clinic if they cannot afford representation.

When there is a dispute regarding your taxpayer account, you have the right to retain a representative.  If you do so, make certain that the representative is authorized to represent taxpayers before the IRS.

THE RIGHT TO A FAIR AND JUST TAX SYSTEM. Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely.  Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

The Taxpayer Advocate Service is an independent organization within the IRS that can help protect your taxpayer rights.  They can offer help if you are experiencing a hardship or haven’t been able to resolve your problems with the IRS.  Visit www.taxpayeradvocate.irs.gov or call 1.877.777.4778 to speak with an agent.

So there you have it – Your Taxpayer Bill of Rights.  We hope that you have learned that the IRS does not necessarily have the final word.

Our last two blogs have addressed four of the ten Rights that taxpayers have according to the Taxpayer Bill of Rights.  Let’s look at the next three Rights.

THE RIGHT TO APPEAL AN IRS DECISION IN AN INDEPENDENT FORUM.  Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have a right to receive a written response regarding the Office of Appeals’ decision.  Taxpayers generally have the right to take their cases to court.

If you feel that the decision made by the IRS is unfair, you can pursue the matter to a higher authority.  You have the right to have your matter heard in court.  Appeal Rights can be found in Publication 5, Your Appeal Rights and How To Prepare A Protest If You Don’t Agree, and Publication 556, Examination of Returns, Appeal Rights, and Claims For Refund.

THE RIGHT TO FINALITY.  Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt.  Taxpayers have the right to know when the IRS has finished an audit.

When you have an open issues with the IRS, we have to Right to be informed and to know when the matter has been concluded.  The IRS will mail you notices of their decisions via USPS.  They will not email you.  Keep all notices so that you have a paper trail of the correspondence.

THE RIGHT TO PRIVACY. Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections, and will provide, where applicable, a collection due process hearing.

Your privacy is important and confidential.  The IRS is aware of the volume of identity theft and has dedicated divisions that deal in this regard.  .

We will wrap the Bill of Rights in our next blog.

Our last blog was the first in our series highlighting the ten Rights that taxpayers have according to the Taxpayer Bill of Rights.  This blog will highlight the next three Rights.

THE RIGHT TO QUALITY SERVICE.  Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service.

If you have questions, the most effective manner to resolve the same is to speak to an IRS representative.  When you call, the agent will give you their name and badge number.  This information is second nature to them and they may state it very quickly.  Don’t be intimidated and not ask for them to repeat the information.  It is very helpful to keep a log of communications with the IRS regarding a particular matter so that if needed, you can refer back to the agents you spoke with and when.

THE RIGHT TO PAY NO MORE THAN THE CORRECT AMOUNT OF TAX. Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.

Contrary to popular belief, as a taxpayer, you are entitled to pay no more than the correct amount of tax based upon your particular situation.  If you feel that you are being assessed more tax than you are legally required to pay (sorry, we must all pay our share of taxes), then you have the right to appeal the assessment.   You can visit the IRS website to learn more about appeals or engage the services of a tax professional to assist you in this regard.

THE RIGHT TO CHALLENGE THE IRS’S POSITION AND BE HEARD. Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.

As mentioned above, you have the Right to challenge and be heard.  Don’t be intimidated because it is the IRS.  Contact the IRS or engage a tax professional to act on your behalf to be heard.  One word of warning – when deciding to take this action, make certain you have documentation available to support your stance.  Without documentation, you may find it more difficult to challenge the position of the IRS.

Stay tuned for more Rights in the upcoming weeks.

Did you know that as a taxpayer, you have a Bill of Rights?  Most taxpayers mumble and grumble about the IRS but they don’t realize that there is a published Bill of Taxpayer Rights which can be used to the advantage of the taxpayers.

For the next few blogs, we will share these Rights.  The first Right is…

THE RIGHT TO BE INFORMED.  Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes. As a taxpayer, you can expect:

• Certain notices must include the amount (if any) of the tax, interest, and certain penalties you owe. It must explain why you owe these amounts. (If you don’t understand how these amounts are calculated, you can call the IRS for an explanation.)
• When the IRS fully or partially disallows your claim for a refund, it must explain the specific reasons why. (Here again, if you don’t understand the reasoning or have information which may be helpful, call the IRS.)
• Help with Understanding Your IRS Notice or Letter is available online at IRS.gov.
• If the IRS proposes to assess tax against you, it must explain the process – from examination (audit) through collection – in its first letter. This letter should explain your options for a review by an independent Office of Appeals and how the Taxpayer Advocate Service may be able to help you. (In the event you do not wish to go through this process alone, you can engage a tax professional to assist.)
• If you enter a payment plan, known as an installment agreement, the IRS must send you an annual statement. This gives you a record of balances and payments. (If you enter a payment arrangement, the best advice is to make certain your payments are made in a timely fashion.  Failing to timely make the agreed upon payments will not be to your advantage and you could face additional interest and penalties on the outstanding balance.)

In the upcoming weeks, we will share the remaining nine Rights.  In the meantime, happy Spring.

There’s a knock on your door and the person tells you they are from the IRS.  Are they?

People can avoid taking the bait and falling victim to a scam by knowing how and when the IRS does contact a taxpayer in person. This can help someone determine whether an individual is truly an IRS employee.

Here are eight things to know about in-person contacts from the IRS:

• The IRS initiates most contacts through regular mail delivered by the United States Postal Service.
• There are special circumstances when the IRS will come to a home or business. This includes:
  • When a taxpayer has an overdue tax bill
  • When the IRS needs to secure a delinquent tax return or a delinquent employment tax payment
  • To tour a business as part of an audit
  • As part of a criminal investigation
• Revenue officers are IRS employees who work cases that involve an amount owed by a taxpayer or a delinquent tax return. Generally, home or business visits are unannounced.
• IRS revenue officers carry two forms of official identification.  Both forms of ID have serial numbers. Taxpayers can ask to see both IDs.
• The IRS can assign certain cases to private debt collectors. The IRS does this only after giving written notice to the taxpayer and any appointed representative. Private collection agencies will never visit a taxpayer at their home or business.
• The IRS will not ask that a taxpayer makes a payment to anyone other than the U.S. Department of the Treasury.
• IRS employees conducting audits may call taxpayers to set up appointments, but not without having first notified them by mail. Therefore, by the time the IRS visits a taxpayer at home, the taxpayer would be well aware of the audit.
• IRS criminal investigators may visit a taxpayer’s home or business unannounced while conducting an investigation. However, these are federal law enforcement agents and they will not demand any sort of payment.

Taxpayers who believe they were visited by someone impersonating the IRS can visit IRS.gov for information about how to report it.

BE CAREFUL WHEN ANSWERING YOUR DOOR!

THE DARK WEB.  Is your information out there?  You try to protect your information, you take the suggested steps by changing passwords, not opening suspicious emails, but that just isn’t enough.  Our information exists in so many locations on the web.  So, you find out that you have been compromised, what should you do?

Here are five steps that the IRS suggests you take:

Five Steps Data Breach Victims Can Take

Every day, data thefts put people’s personal and financial information at risk. There are steps that identity theft victims can take to protect their financial accounts, their identities and their tax returns.

This tip is part of National Tax Security Awareness Week. The IRS is partnering with state tax agencies, the tax industry and groups across the country to remind people about the importance of data protection.

Generally, thieves want to use the stolen data as quickly as possible. That may mean selling the data on the Dark Web for use by other criminals. It may also mean the crook tries to withdraw money from bank accounts or charge credit cards. A thief might also try to file a fraudulent tax return using victims’ names for a refund.

People who are the victim of a data breach should consider these five steps to help protect their sensitive information that can be used on a tax return:

• If possible, the victim should try to determine what information the thieves compromised. Victims can try to find out if the criminals accessed emails and passwords, or more sensitive data such as name and Social Security number.
• Breached companies often offer credit monitoring services to victims. Victims should consider taking advantage of these offers.
• Victims should place a freeze on credit accounts to prevent access to credit records. There may be a fee that varies by state. At a minimum, victims should place a fraud alert on their credit accounts by contacting one of the three major credit bureaus. A fraud alert on credit records is not as secure as a freeze, but a fraud alert is free.
• Victims should reset passwords on online accounts. It is especially important to reset passwords of financial sites, email and social media accounts. Some experts recommend at least 10-digit passwords mixing letters, numbers and special characters. People should use different passwords for each account, using a password manager or password app if necessary.
• People should use multi-factor authentication when available. Some financial institutions, email providers and social media sites allow users to set their accounts for multi-factor authentication. This means users may need a security code, usually sent as a text to their mobile phone, in addition to a username and password.

DON’T LET YOURSELF BE A VICTIM.

The IRS reminds taxpayers they have a variety of options to get help filing and preparing their tax return on IRS.gov, the official IRS website. Taxpayers can find answers to their tax questions and resolve tax issues online. The Let Us Help You page helps answer most tax questions, and the IRS Services Guide links to these and other IRS services.

Taxpayers can go to IRS.gov/account to securely access information about their federal tax account. They can view the amount they owe, pay online or set up an online payment agreement; access their tax records online; review the past 18 months of payment history; and view key tax return information for the current year as filed. Visit IRS.gov/secureaccess to review the required identity authentication process. In addition, 70 percent of the nation’s taxpayers are eligible for IRS Free File. Commercial partners of the IRS offer free brand-name software to about 100 million individuals and families with incomes of $66,000 or less.

The online fillable forms provide electronic versions of IRS paper forms to all taxpayers regardless of income that can be prepared and filed by people comfortable with completing their own returns.

Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) offer free tax help to people who qualify. Go to IRS.gov and enter “free tax prep” in the search box to learn more and find a nearby VITA or TCE site, or download the IRS2Go smartphone app to find a free tax prep provider. If eligible, taxpayers can also locate help from a community volunteer. Go to IRS.gov and click on the Filing tab for more information.

The IRS also reminds taxpayers that a trusted tax professional can provide helpful information and advice. Tips for choosing a return preparer and details about national tax professional groups are available on IRS.gov.”

Don’t be afraid to ask for help from the IRS – they really aren’t as bad as they are thought to be.

TAXPAYER HELP FROM THE IRS

The IRS reminds taxpayers they have a variety of options to get help filing and preparing their tax return on IRS.gov, the official IRS website. Taxpayers can find answers to their tax questions and resolve tax issues online. The Let Us Help You page helps answer most tax questions, and the IRS Services Guide links to these and other IRS services.

Taxpayers can go to IRS.gov/account to securely access information about their federal tax account. They can view the amount they owe, pay online or set up an online payment agreement; access their tax records online; review the past 18 months of payment history; and view key tax return information for the current year as filed. Visit IRS.gov/secureaccess to review the required identity authentication process.

In addition, 70 percent of the nation’s taxpayers are eligible for IRS Free File. Commercial partners of the IRS offer free brand-name software to about 100 million individuals and families with incomes of $66,000 or less.

The online fillable forms provide electronic versions of IRS paper forms to all taxpayers regardless of income that can be prepared and filed by people comfortable with completing their own returns.

Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) offer free tax help to people who qualify. Go to IRS.gov and enter “free tax prep” in the search box to learn more and find a nearby VITA or TCE site, or download the IRS2Go smartphone app to find a free tax prep provider. If eligible, taxpayers can also locate help from a community volunteer. Go to IRS.gov and click on the Filing tab for more information.

The IRS also reminds taxpayers that a trusted tax professional can provide helpful information and advice. Tips for choosing a return preparer and details about national tax professional groups are available on IRS.gov.”

Don’t be afraid to ask for help from the IRS – they really aren’t as bad as they are thought to be.

The Internal Revenue Service announced that the nation’s tax season will begin Monday, Jan. 29, 2018 and reminded taxpayers claiming certain tax credits that refunds won’t be available before late February.

The IRS will begin accepting tax returns on Jan. 29, with nearly 155 million individual tax returns expected to be filed in 2018. The nation’s tax deadline will be April 17 this year – so taxpayers will have two additional days to file beyond April 15.

Many software companies and tax professionals will be accepting tax returns before Jan. 29 and then will submit the returns when IRS systems open. Although the IRS will begin accepting both electronic and paper tax returns Jan. 29, paper returns will begin processing later in mid-February as system updates continue. The IRS strongly encourages people to file their tax returns electronically for faster refunds.

The IRS reminds taxpayers that, by law, the IRS cannot issue refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) before mid-February. While the IRS will process those returns when received, it cannot issue related refunds before mid-February. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on Feb. 27, 2018, if they chose direct deposit and there are no other issues with the tax return.

The IRS also reminds taxpayers that they should keep copies of their prior-year tax returns for at least three years. Taxpayers who are using a tax software product for the first time will need their adjusted gross income from their 2016 tax return to file electronically. Taxpayers who are using the same tax software they used last year will not need to enter prior-year information to electronically sign their 2017 tax return. Using an electronic filing PIN is no longer an option. Taxpayers can visit IRS.gov/GetReady for more tips on preparing to file their 2017 tax return.

 April 17 Filing Deadline  

The filing deadline to submit 2017 tax returns is Tuesday, April 17, 2018, rather than the traditional April 15 date. In 2018, April 15 falls on a Sunday, and this would usually move the filing deadline to the following Monday – April 16. However, Emancipation Day – a legal holiday in the District of Columbia – will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 17, 2017. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.

It’s the time of the year when many taxpayers choose a tax preparer to help file a tax return. These taxpayers should choose their tax return preparer wisely.  This is because taxpayers are responsible for all the information on their income tax return. That’s true no matter who prepares the return.

Here are ten tips from the IRS for taxpayers to remember when selecting a preparer:

1. Check the Preparer’s Qualifications. Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool helps taxpayers find a tax return preparer with specific qualifications. The directory is a searchable and sortable listing of preparers.
2. Check the Preparer’s History. Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to the verify enrolled agent status page on IRS.gov or check the directory.
3. Ask about Service Fees. Avoid preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition. When asking about a preparer’s services and fees, don’t give them tax documents, Social Security numbers or other information.
4. Ask to E-File. Taxpayers should make sure their preparer offers IRS e-file. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and use direct deposit.
5. Make Sure the Preparer is Available. Taxpayers may want to contact their preparer after this year’s April 17 due date. Avoid fly-by-night preparers.
6. Provide Records and Receipts. Good preparers will ask to see a taxpayer’s records and receipts. They’ll ask questions to figure things like the total income, tax deductions and credits.
7. Never Sign a Blank Return. Don’t use a tax preparer who asks a taxpayer to sign a blank tax form.
8. Review Before Signing. Before signing a tax return, review it. Ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it. They should also make sure that their refund goes directly to them – not to the preparer’s bank account. Review the routing and bank account number on the completed return. The preparer should give you a copy of the completed tax return.
9. Ensure the Preparer Signs and Includes Their PTIN. All paid tax preparers must have a Preparer Tax Identification Number. By law, paid preparers must sign returns and include their PTIN.
10. Report Abusive Tax Preparers to the IRS. Most tax return preparers are honest and provide great service to their clients. However, some preparers are dishonest. Report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their return without the taxpayer’s consent, they should file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit.

HAPPY TAX FILING!