Posts Tagged ‘irs’

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Anti-Fraud Efforts by The IRS…

In Accounting & Finances,Business,Taxes on December 15, 2015 by Sufen Wang Tagged: , , , , ,

IRS Keeps on Truckin’ in Anti-Fraud Efforts with a W-2 Verification Code Test Drive

ID theft

Tis the Seasons!  Year end 2015 W-2s will be mailing out by January 31, 2016 and the IRS continues to wage war against identity thieves and other tax fraudsters via a Form W-2-Wage and Tax Statement-verification code pilot program. The program will test whether adding an authentication code on W-2 copies provided to employees will be “useful in evaluating the integrity of the W-2 data that taxpayers submit when they e-file their 1040s,” explained Scott Mezistrano of the IRS, during a payroll industry conference. Note the mention only of e-file: the code won’t be tried out on W-2s filed with paper Forms 1040, keeping in line with the IRS’s slow-but-sure transition to cyberspace.

Algorithm2The W-2 code dry run for tax year 2015 will be limited to a few, hand-picked payroll service providers (PSP), who will in turn hand pick some employer clients, whose employees will in turn receive W-2s with the brand spankin’ new codes on Copies B and C of the Form. Each code will be 16 characters long, like this – xxxx-xxxx-xxxx-xxxx – and will be generated by each PSP using a special IRS-provided algorithm. The kicker is that the algorithm will use certain data points from the W-2 to generate the code. So after the employee enters their unique code on their e-filed tax form, the IRS can check to make sure it matches the data on the Form W-2.

Form W2Since this is just a W-2 verification pilot program, no employee will get penalized if they forget to include their code or they submit the wrong one when they e-file. Their returns will be processed per the usual, along with their refunds. And while the trial will be limited in scope, don’t be surprised if you get a substitute Form W-2 with a verification code on it. While you aren’t obligated to partake in entering the code, your participation could end up helping other honest taxpayers down the road. If the process is successful, by as early as 2017 all Form W-2s could be updated to include a verification code box.

StolenIdentityConsidering the less-than-stellar quality of the IRS’s identity theft victim customer service, let’s hope the W-2 anti-fraud program does work out. All an identity thief really needs is your name, date of birth, Social Security Number, and no conscience whatsoever. Using your personal info, the criminal will file a tax return using fake W-2 information to try to get themselves – not you – as big of a refund as possible. If the trial is a home run, the W-2 verification program would make the lives of these low-lives a lot harder because they would need to enter the magic code that matches the W-2 data.

Sufen Wang, M.S.Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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Tax Returns Errors = Delay in Refunds

In Accounting & Finances,Business,Taxes on June 1, 2014 by Sufen Wang Tagged: , , , , , , , ,

homerMake No Mistake About It: Tax Return Errors Delay Refunds

Tax day has come and gone, and now you just have to wait. And wait and wait and wait and wait a second, what’s taking your refund so long? The delay might be due to a blooper on your tax return – the IRS will need to contact you to correct it. You’re more likely to make a mistake if you file on paper instead of IRS e-file – twenty times more likely in fact.

identity_theft3For example, you might have written in the wrong SSN or even forgot to put it at all. That’s usually the case – we forget the most important thing because we’re so focused on the little details. It’s okay to peek at your SSN card to make sure you got your own number right.

Everybody has crazy spellings of their names nowadays with silent consonants, extra vowels, and missing letters all over the place. Be sure to spell the names of everyone on your tax return exactly as they’re printed on their SSN cards.

help+calculatorFiling status might seem like a guessing game. A lot of folks accidentally file as Head of Household instead of as Single (the former does sound more impressive). Luckily, the Interactive Tax Assistant can give you a helping hand with filing status.

OLYMPUS DIGITAL CAMERASimple arithmetic gets complicated fast when a lot of numbers are involved. If you’re tempted to show that calculator who’s boss and do everything with the old noggin’, don’t. Math mistakes are a common error on tax returns, especially when you don’t have tax preparation software doing the calculations for you.

stop-read-instructionsRead all the instructions. This goes for everything in life, but is especially important when it comes to baking, setting up expensive electronics, and figuring tax credits or deductions. A lot of filers botch up when figuring their EITC, Child and Dependent Care Credit, and the standard deduction.

Choosing direct deposit will get you your refund fastest. However, choosing direct deposit and using the wrong bank and account numbers on your return is a sure way to get your refund slower.

pen_signatureWhew, you made it through the tax return, double-checking your math and ensuring everyone’s names have all the extra letters they’re supposed to have. But all that work will be for nothing if you don’t put your John Hancock on there, along with the date. And go find your spouse if you’re filing jointly – the return isn’t valid unless both of you sign.

You can’t exactly sign with a pen when you’re filing electronically. Well I mean you can try to, but your computer screen won’t look too great afterwards. Instead, use a PIN to sign the return. If you know last year’s e-file PIN, use that. If not, enter the Adjusted Gross Income from your originally-filed 2012 federal tax return, but don’t use the AGI amount from an amended or IRS-corrected 2012 return. 

internet-32340_640To err is human – which is why it’s best to rely on IRS e-file in the future.

Sufen Wang, M.S.Accountancy
www.sufenwang.com
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

 

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Another One Bites the Dust:

In Accounting & Finances,Business,Taxes on December 3, 2013 by Sufen Wang Tagged: , , , , , ,

taxesNo More Walk-In Free Tax Prep at IRS Field Offices

Help is no longer around the corner. The IRS is shutting the door on walk-in tax preparation assistance at its field offices in 2014. With only 60,000 returns prepared last year, and the budget not lookin’ too good, the IRS decided the free help would have to go.

MH900056119Unfortunately that means the elderly, disabled, and low-income taxpayers who the assistance was available to now also have to go spend money on tax preparation. IRS National Taxpayer Advocate Nina Olson called out the IRS on this change. “I seem to think that preparing taxes for our citizens is a core tax administration duty, and I don’t know of any [developed] country that is not doing it except the Internal Revenue Service of the United States.”


irs-tax-preparersThat’s a good point. But on the other hand, the U.S. has a voluntary compliance system, whereas in some countries, the government prepares the return and it’s nearly impossible to contest. And those affected by the service shut-down do still have a resource for free tax preparation: their local Volunteer Income Tax Assistance programs run by the IRS. While TIGTA reports that VITA-prepared tax returns are often chock-full of errors, at least this option is available if needed.

TaxBlocksCalculator_43_0Of course the best solution is to have a paid tax preparer complete the return. That’s their job, after all, and they’ll make sure things go off without a hitch. Tax preparation is going to be a little rougher this time around for elderly, disabled, and low-income taxpayers, but it won’t be impossible. If you know somebody in need who also needs help filing their taxes, take a few minutes to give them the rundown on the cut walk-in service and their current tax preparation options.

Sufen Wang, M.S.Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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$1.6 Billion Down, Only $3.6 Billion to Go:

In Accounting & Finances,Business,Taxes on November 25, 2013 by Sufen Wang Tagged: , , , , ,

taxfraudTIGTA Reports on Fraudulent Tax Refunds
The Treasury Inspector General for Tax Administration (TIGTA) recently released some great news: the IRS issued $3.6 billion in fraudulent tax returns in 2011.

Um. I know, that’s a whopping amount of money that should not have been handed out. But it is a pleasant change of pace from the $5.2 billion reported for tax year 2010 to a $3.6 billion in 2011.

handmoneyDespite the “improvement,” the IRS needs to step up its game and fix lingering problems identified by TIGTA. For example, a handful of tax refunds depositing to the same bank account should be a bright red flag. Apparently the IRS is color blind. But $3.6 billion is a little bit harder to ignore.

identity_theftAnd the agency does seem to lose track of time when it comes to identify theft cases. TIGTA reported that it took the IRS about 312 days to resolve tax-related identity theft cases. That’s like an anniversary… So the million dollar – well, actually billion dollar – question is what will the IRS do about these numbers?

Sufen Wang, M.S.Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (562) 806-5805

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2014 Tax Season Start Date Push Back…

In Accounting & Finances,Business,Taxes on November 18, 2013 by Sufen Wang Tagged: , , , , , , ,

Early Birds Must Be Patient: Government Closure Pushes Back 2014 Tax Season Start

New Year's Eve ClockThe government shutdown will have a ripple effect into next year. The IRS announced a delay of about one to two weeks to the start of the 2014 filing season. The agency needs the extra time to double-check its tax processing systems since the federal government was M.I.A. for 16 days.

Think government computers should be able to handle anything, no problem? Basically, fifty core IRS systems have to be able to process 150 million tax returns with no glitches. Updating these systems is a really confusing, year-round process with most of the work starting in the fall – in other words, right when the government stopped dead in its tracks.

Calendar 321About 90 percent of IRS operations were closed during the shutdown. Stir in the fact that this year there were already extra programming demands on IRS systems, to provide more refund fraud and identity theft detection and prevention, and you’ve got yourself a recipe for delay. The original start date of the 2014 filing season was Jan. 21. Now the IRS won’t start accepting 2013 individual tax returns until sometime between Jan. 28 and Feb. 4.

MH900339880Sending tax returns via snail mail won’t bypass the delay either: the IRS won’t process paper tax returns before the postponed start date. And there’s no point in doing that since taxpayers will receive their tax refunds much faster by using e-file with direct deposit. Looking further down the road, the April 15 tax deadline is set by statute, so that won’t get pushed back even with the late start.

The IRS is up and running after the 16-day downtime and is putting in work to catch up on the 400,000 pieces of paperwork that piled up during the closure. Stir in the 1 million items already being processed before the shutdown, along with the heavy demand on phone lines and walk-in sites, and you’ve got yourself another recipe, this time for a headache. The IRS encourages taxpayers to wait to call or visit if their issue is not urgent, and to use automated applications on IRS.gov. Don’t rush if you don’t have to: set your briefcase down and take a minute to smell the autumnal air before you continue on your busy day.

MH900237191Addendum: And that’s not all that was delayed folks. The PTIN renewal season was supposed to start on October 16, but nothing could happen because the IRS was closed. Luckily the agency got things back on track and the PTIN Renewal Season for 2014 officially began on October 30. That means about 690,000 federal tax return preparers have two months – from now until December 31 – to go online and renew their PTIN’s. Anyone who doesn’t and still wants to make money preparing federal returns, will be out of a job come New Year’s.  

Sufen Wang, M.S. Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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Representative Please!

In Accounting & Finances,Business,Education,Taxes on October 7, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900056119TIGTA Audit Ensures Taxpayers’ Rights are Front and Center

Did you know IRS personnel are required to stop an interview if the taxpayer wants to consult with a representative and they also can’t bypass a representative without supervisory approval?

MH900251655If you didn’t know, the Treasury Inspector General for Tax Administration (TIGTA) has your back. Each year TIGTA hones in on an IRS office that regularly interacts with taxpayers and their representatives. This time around they scrutinized the folks who work in the Office of Appeals to make sure they’re contacting taxpayer representatives during key actions. The results of that audit, the Fiscal Year 2013 Statutory Review of Restrictions on Directly Contacting Taxpayers, are in and…

 MH900442430..the Office of Appeals did so-so. In 11 of 96 sampled cases (out of 72,239 total cases closed by Appeals), Appeals personnel skipped major steps. They either tried to call the taxpayer directly or didn’t send copies of very important papers to the authorized representative. It’s possible that those who broke the rules just made honest mistakes – maybe they were in a hurry to get home for dinner – but the policies are in place for the taxpayer’s protection.

And, what’s more, the bigwigs in the Appeals office didn’t do their part to ensure that the workers were following procedure. Accordingly, TIGTA offered some stern advice: the Chief of Appeals should “provide additional guidance to first-line managers and Appeals personnel that will reinforce the importance of ensuring that taxpayer representatives are involved in all case activities.” In other words, put in work at the top of the line so all the proper paperwork gets done down the line.

MH900289960Of course the IRS agreed with TIGTA’s recommendation. The agency’s first move will be to update the Internal Revenue Manual and front-line managers will have homework to do to brush up on their responsibilities. If you want more reading material yourself, check out the full Statutory Review here: http://www.treasury.gov/tigta/auditreports/2013reports/201330080fr.html

Sufen Wang, M.S. Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793

Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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IRS Hasn’t Been Pennywise:

In Accounting & Finances,Business,Culture,Entertainment,Taxes on June 11, 2013 by Sufen Wang Tagged: , ,

MH900185740Treasury Inspector General for Tax Administration (TIGTA) Audit Identifies Excessive Spending at IRS Conference

The IRS might need to brush up on its coupon clipping skills after TIGTA’s recent audit of the agency’s spending at conferences from 2010 to 2012. Let’s just say that although every penny counts, the Internal Revenue Service hasn’t been counting every penny when it comes to planning out-of-office events.

TIGTA’s audit focused on a certain very expensive Small Business/Self-Employed (SB/SE) Division’s All Managers Conference in Anaheim, California in August 2010. Held at the Marriott, Hilton, and Sheraton hotels, this event was attended by 2,609 SB/SE Division executives and managers and reportedly cost $4.1 million – yikes! Because IRS management didn’t have to track and report actual conference costs at the time, there’s no way to double-check that number. It doesn’t matter though – TIGTA found plenty of splurging anyways.

MH900310838First of all, the IRS didn’t use available internal personnel to find the best deal in town. Instead, SB/SE management hired two non‑governmental event planners to choose a location for the conference. This non-IRS pair obviously wasn’t looking out for the IRS’ (and the taxpayer’s) pocket book, they were looking to get paid. And – what do you know – the event planners received an estimated $133,000 commission from the three hotels based on the cost of rooms paid for by the IRS.

MH900023026It’s safe to assume those planners didn’t do much hotel room bargain hunting online. Still, some bargaining did occur. They made sure to negotiate a bunch of concessions for the managers and executives at the conference. Attendees got daily continental breakfast. And a welcome reception with two drink coupons. And there were lots and lots of suite upgrades.

And that’s not all folks – TIGTA also found other very fishy expenses like“planning trips” held before the conference, the production of a Star Trek parody and “SB/SE Shuffle” video, a keynote speaker who painted portraits of Michael Jordan and Abraham Lincoln, an information corridor that raffled off baseball tickets, and various promotional gifts given to IRS employees.

Sure, brief bags and hard-covered spiral journals replete with imprinted logos are nice souvenirs to bring home, but they’re definitely not necessary costs. The IRS could have got a much lower lodging rate for the conference by using governmental event planners and eliminating those extra hotel amenities.

MH900363294Accordingly, TIGTA had more than a few budgeting tips for the IRS, which the IRS agreed to follow: verify that conference-costs and attendance are being tracked, use IRS personnel to plan future conferences, evaluate whether there should be hotel upgrades, ensure that taxable travel is identified and that Forms W-2 are issued to applicable employees, etc. Excessive Federal spending is a hot topic right now, so the IRS is going to have to start saving money if it wants to save face.

Sufen Wang, M.S. Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793

Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805