Posts Tagged ‘irs’
In Accounting & Finances,Business,Education,Family,Taxes on February 21, 2013 by Sufen Wang Tagged: Certified Public Accountant, Enrolled agent, Google, Internal Revenue Service, irs, Preparer Tax Identification Number, Tax preparation, Tax returns
RTRP Program Up in the Air: Testing and Continuing Education are Voluntary
Calling all Registered Tax Return Preparers! You know how the IRS now requires every paid tax return preparer to pass a competency test and meet continuing education requirements in order to be called an RTRP? Not anymore. On January 18, a federal judge ruled that the mandatory RTRP regulatory system is invalid because the IRS had to stretch a law to make it apply to preparers in the first place. Prepare to be very, very confused.
In short, the ruling means the IRS does not have the authority to license tax preparers. Which means that as of right now, according to the IRS, “tax return preparers covered by this program are not currently required to register with the IRS, to complete competency testing or secure continuing education.” The regulatory practice requirements for CPA’s, attorneys, enrolled agents, enrolled retirement plan agents, or enrolled actuaries are unaffected by the ruling.
Required is the key word in all of this. The IRS filed a motion to suspend the injunction, which was denied on Feb.1 by the same judge. However, he did clarify that the IRS can allow preparers to “voluntarily obtain credentials that might distinguish them from other preparers.” Thus, the IRS’ testing and continuing-education centers will remain open. Indeed, it might be a good idea to complete the RTRP requirements anyways: the IRS can appeal the judge’s full ruling and his decision could eventually be reversed.
The judge also clarified that the injunction does not affect PTINs, which means that those requirements and fees are still active. The IRS has reopened the online PTIN system, but it’s being updated to reflect current requirements. All of this confusion comes at a bad time with tax filing season just ahead. Tax return preparers need answers from the IRS and they need them fast.
And what does all this mean for us, the tax payers? Always check your tax preparer‘s background, credentials and ask for references! “Google” the tax preparer’s name and check out his/her background as much as you are able before you make the hiring. Just because it is NOT required to be licensed, does not mean that anyone off the street can and should prepare your tax returns! Hire a reputable tax preparer will paid off in the long run!
On the Money, Sufen Wang, Wang Solutions
M.S.Accountancy, Long Beach, CA 562-856-0793
In Accounting & Finances,Business,Education,Taxes on January 27, 2013 by Sufen Wang Tagged: Fraud, Identity theft, Internal Revenue Service, irs, Social Security number, Tax, Tax avoidance and tax evasion, Tax return (United States)
Report Suspected Tax Fraud
To catch a thief, the IRS needs your help. If you suspect someone might be bending certain tax laws, don’t just stand there – do something! There’s a variety of tax frauds, so the IRS has conveniently created a chart to explain which form you’ll need to fill out in order to make the tax world a better place.
Direct your pen to Form 3949-A, Information Referral, if you suspect an individual/business of false exemptions or deductions, kickbacks, false/altered documents, failure to pay taxes, unreported income, failure to withhold, or organized crime. Then congratulate yourself on doing the right thing.
Identity theft is also a type of tax fraud. If you believe that someone is posing as you and has used your SSN for employment purposes or to file a tax return, pick up Form 14039, Identity Theft Affidavit. The sooner you submit the form, the sooner the impostor will be caught.
Maybe your friendly neighborhood tax preparer has been getting rich a little too quickly. If you suspect fraudulent activity or an abusive tax scheme by a tax return preparer/company, report it on Form 14157. You’ll need both this form and Form 14157-A if you also think a tax return preparer filed or altered your return without your consent.
If you have information about a suspicious tax promotion or promoter, whip out Form 14242 and show that fake promotion who’s boss. And finally, if you notice misconduct or wrongdoing by an exempt organizationor employee plan, complain about it on Form 13909, Tax-Exempt Organization Complaint (Referral) Form.
Reporting tax fraud is a good deed and should be reward enough by itself. However, for anyone who needs extra motivation, check out Form 211, Application for Award for Original Information. Sometimes it pays to be a whistleblower. Do the right thing, it is hard, but it is very, very rewarding!!!
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
In Accounting & Finances,Business,Taxes on November 19, 2012 by Sufen Wang Tagged: FTA, Internal Revenue Service, irs, IRS tax forms, Tax, Treasury Inspector General for Tax Administration, Waiver
The IRS Made it Hard to Find…
Failed…
That’s the only word to describe the IRS’ actions concerning penalty forgiveness. How else could you explain forgetting to inform 1.45 million taxpayers that they qualified for and had a right to ask for relief from tax penalties totaling $181 million? If you’re like most people and have never heard of this tax penalty relief, here’s the reason why:
The IRS fines taxpayers when they don’t file a tax return or pay the full tax shown on any tax return. However, any taxpayers who have demonstrated full compliance over the previous three years can have these fines waved in something known as “first-time abate” (FTA). The only catch is that you need to first request the penalty waiver – and that’s hard to do if you don’t even know the waiver exists.
And the IRS has certainly kept its lips zipped and its fine print invisible. The potential penalty relief is not mentioned anywhere on Form 1040, nor is it on the IRS website’s page about penalties, or on any balance due notices – not even within the text on those documents mentioning penalties for failure to file or pay. Even worse, over 90% of the people who actually did qualify for the penalty relief were not granted it.
Of course, the IRS’ failure does not mean that all taxpayers are perfect angels. The TIGTA found that a number of taxpayers who received the FTA waivers failed to fully pay off their taxes six months after the postponement. Accordingly, the TIGTA suggested that the IRS also use the FTA waiver as a compliance tool: make taxpayers aware of their potential to receive an FTA waiver based on their past compliance history and make receipt of the waiver dependent on taxpayers paying their current liability. That way, it’s a win-win situation for everyone involved.
If you to read all of the juicy legal tidbits regarding the TIGTA’s findings, you can check out the full report here.
On the Money, Sufen Wang, Wang Solutions
In Accounting & Finances,Business,Taxes on May 20, 2012 by Sufen Wang Tagged: Fresh Start, Fresh Start Initiative, Internal Revenue Service, irs, Offer in compromise, OIC, Tax, YouTube
A Fresh Start from the IRS
If you still owe taxes, you might be feeling the heat from deadlines and failure-to-pay penalties. Luckily, the IRS is cool enough to give you relief in three areas with its “Fresh Start” initiative.
1. PENALTIES: That’s right folks, the Fresh Start Penalty Initiative gives eligible taxpayers a six-month extension (until Oct. 15, 2012) to fully pay their 2011 taxes, without any penalties. This won’t get you out of paying interest on your owed taxes. But as long as you pay those taxes and the interest by the October deadline, you won’t be charged any nasty failure-to-pay penalties.
All the people who aren’t getting a lot of business/unemployed people in the house raise your hands! Your bad luck is good news for you, because the Fresh Start Penalty Initiative is only available to: Wage earners who have been unemployed at least 30 consecutive days during 2011 or in 2012 up to this year’s April 17 tax deadline – OR – Self-employed individuals who experienced a 25 percent or greater reduction in business income in 2011 due to the economy.
To find out more about this limited time offer, you’ll need to visit the IRS website and read over the brand spankin’ new Form 1127A.
2. INSTALLMENT AGREEMENT: The Fresh Start initiative also offers expanded and improved streamlined installment agreement provisions. Sounds fancy, but it actually makes things simpler. Under this option, more people will have more time to catch up on back taxes, which means fewer penalties for everyone involved. Best of all, streamlined installment agreements require limited financial information.
3. OFFER IN COMPROMISE: What’s the difference between an agreement and a compromise? Well, the “Offer in Compromise” is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Under the Fresh Start initiative, the IRS decided to get real and has been working on more common-sense changes to the OIC program.
Tired of reading, but want to find out more? Then grab some popcorn and enjoy the IRS Fresh Start YouTube video and the IRS video series “Owe Taxes: Understanding IRS Collection Efforts.” They’re not as boring as they sound.
On the Money,
Sufen Wang
Wang Solutions
In Accounting & Finances,Business,Taxes on May 11, 2012 by Sufen Wang Tagged: Forbes, Internal Revenue Service, irs, Notice, Tax, tax return, Telephone number, TurboTax
It Shouldn’t Be…
You head out to your mailbox expecting to find this week’s issue of Forbes. Instead, you open the mailbox and see a notice from the IRS sitting on top. Don’t assume it’s going to be a hassle – most of these letters can be handled without having to call or visit an IRS office.The notice might order you to pay up, but often it will simply notify you of account changes. Whatever the problem, the letter will provide specific instructions about what you need to do.
Please read carefully. If you received a correction notice, compare it with the information on your tax return. If everything looks A-okay, there’s no need to reply – unless the notice tells you otherwise. If the correction looks incorrect, you’ll need to let the IRS know with a written explanation.
Just because you don’t need to contact the IRS, doesn’t mean you can’t. If you have a question, just call the telephone number in the upper right corner of the notice. Have your tax return handy when you call.
See, you’ll be relaxing and reading your magazine in no time – until the next IRS notice arrives in the mail.
On the Money,
Sufen Wang
Wang Solutions
In Accounting & Finances,Business,Human Resources,Taxes on April 23, 2012 by Sufen Wang Tagged: accounting, Audit, Credit card, Internal Revenue Service, irs, Tax, tax return, United States
You’re Not Done Yet!
Now that you’ve filed your tax returns, you might be tempted to push your tax documents out of sight, out of mind. That’s not a good idea. Keeping good records after you filed is a good idea, just in case the IRS selects your returns for an audit.
In general, any documents relating to your federal tax returns should be saved for at least three years. This includes bills, credit card receipts, invoices, and any other records that support deductions or credits you claim on your return.
Don’t pull out the shredder for your whole filing cabinet just yet. To be on the safe side, you should keep any and all real estate refinancing loan docs, exchange calculation, escrow closing statements, inheritance or funds gifted to children, trust-related issues, stocks and bond trades, etc. for more than 3 years. Let’s try 5 to 7 years.
Finally, any and all payroll related records should be kept for about 10 years. Yes, you read that right: one whole decade. A few years ago I encountered a case where the State of California Employment Office (EDD) could not reconcile data on an employee, dating back to 1999 and decided to seek out my assistance via an audit. Fortunately, I was able to complete the audit, clean as a whistle, because I had all of the original records on the subject employee.
That just goes to show that employers should make room for keeping records. If you want to save space, go digital and scan all of the employees’ records – but always ensure that their signatures are clear and legible in the scanned images. However you do it, save your records now so you can save yourself some trouble in the future.
On the Record,
Sufen Wang
Wang Solutions
In Accounting & Finances,Business,Taxes on April 16, 2012 by Sufen Wang Tagged: Computer file, Credit card, Filename extension, Internal Revenue Service, irs, Overtime (sports), Tax, tax return
Can’t Pay? It’s Okay! Don’t Delay, File Your Returns Today
Tax returns will be due in less than 48 hours. Don’t have a panic attack if you can’t pay all the taxes you owe when you file. There are always solutions to problems….. But File, File, File – on time. It’s better to file right now and pay as much as you can, than to not file at all. If you don’t, you’ll be looking at a late filing penalty, in addition to a late payment penalty, and accrued interest charges. Or make sure you file an extension by April 17 with some estimated tax along with it.
This extension will give you an extra 6 months, until October 15. But remember this extension will only give you extra time, but not to reduce your tax liabilities. Interest and penalty will continue to accrue during this 6 months extended period on your tax responsibilities. Folks, DO NOT wait until October 15 to seek another extension, because there is NO extension on your extension…
Business Extension Form 7004.
Personal Extension Form 4868.
If you are not able to pay your taxes right now, still file your returns on time, and then request for an installment payment agreement from the IRS (for a fee, of course). You can also use this option when your bill arrives from the IRS. Remember the IRS also accept credit cards… In any case, File, File, File…
On the Money
Sufen Wang
Wang Solutions
In Accounting & Finances,Culture,Education,Family,Taxes on March 30, 2012 by Sufen Wang Tagged: Adjusted gross income, Adoption, Brangelina, Internal Revenue Service, irs, Money, Patient Protection and Affordable Care Act, Tax
Now with an Added Bonus from the IRS
Have you read the tabloids lately? Brangelina is having another baby! No, not adoption this time, but for those adoptive parents out there who need extra money, here are some IRS tips on taxes and credits.
With adoption, comes responsibility – and lots of bills. Luckily, if you paid expenses to adopt an eligible child in 2011, you have even more to be excited about than just a new member of your household. Say hello to an expanded adoption credit. The Affordable Care Act increased the credit to a maximum $13,360 and made it refundable. In other words, you can get the adoption credit as a tax refund even after your tax liability has been reduced to zero.
Of course, there’s always fine print when money is at stake. While you may consider the Chihuahua you rescued from the animal shelter to be your baby, the IRS defines an eligible child as “under 18 years old, or physically or mentally incapable of caring for himself or herself.” And those expenses don’t refer to the big screen TV you bought on the way to the courthouse. They mean adoption fees, court costs, attorney fees – basically all the “reasonable and necessary expenses” directly related to the legal adoption. One more qualification: if you are rich like (Brangelina), then you are out of luck. Anybody with a modified AGI of $225,210 or higher cannot receive the credit.
Unfortunately, getting the credit requires actual paperwork. Yes, you read that right. You must file a paper tax return, Form 8839, Qualified Adoption Expenses, and attach documents supporting the adoption. No, a hand-written note on a piece of binder paper doesn’t count as a supporting document. The IRS wants you to include stuff like a final adoption decree or a placement agreement from an authorized agency. All of this doesn’t mean you can’t use IRS Free File or other software to prepare your returns first. However, you must eventually print your returns and mail them if you want the IRS to show you the money.
So, for those of you with a big heart and an ache to have children running around the house, adopt away! Hope this article helps the road to adoption a little easier….
On the Money,
Sufen Wang
Wang Solutions
In Accounting & Finances,Business,Taxes on March 18, 2012 by Sufen Wang Tagged: Internal Revenue Service, irs, IRS e-file, Nina Olson, Tax, tax refund, Tax return (United States), United States
IRS Practitioner Phone Line Wait Time: First Sign of Services Decline?
Back in November, the IRS predicted that reducing its budget would mean trouble for taxpayers and practitioners down the road. Well, now we’re down the road and it looks like the IRS was right. (Ref: Blog: IRS Budget Cut)
From January 1 to March 1, IRS’s practitioner priority telephone line serviced only 69.9 percent of calls and the average wait time was 26 minutes. IRS Taxpayer Advocate Nina Olson advised callers to “bring your knitting to the phone.” She explained that “There is simply too much work and not enough employees to do the work.” Many practitioners have already noticed an overall increase in tax return processing time and the issuance of tax refunds.
If problems like this are occurring with only a 0.2% reduction in funding from 2010 to 2011, then just imagine how long the wait time will be when the 2.5% cut in 2012 comes into full effect. On the bright side, at least a lot of sweaters will get knitted.
On the Money,
Sufen Wang
Wang Solutions
In Accounting & Finances,Business,Culture,Taxes on March 8, 2012 by Sufen Wang Tagged: Barter, business, Internal Revenue Service, irs, IRS tax forms, Partnership, Small business, Tax
“I will gladly pay you Tuesday for a hamburger today!”
That classic Wimpy phrase was not just about hamburgers, it’s about bartering – one of the oldest business transactions in human history. Well, in Wimpy’s case, it was probably more like an “I.O.U.” than an actual bartering exchanging hands. Yes, before coins and dollars were invented, folks survived by trading stuff. Bartering is back in full swing now that the country is going through some hard times, so it’s time to dust off your haggling skills.
The official definition of bartering is “the trading of one product or service for another.” If you offer your friend three cookies in exchange for a sandwich, you have just bartered. Of course, it gets more complicated than this in the business world, and small business owners can save a lot of money by bartering for the products and services they need.
In general, bartering involves no exchange of cash, but that doesn’t mean you’re off the hook with the IRS. The fair market value of property or services received through barter is taxable income. Since it takes two to barter, both parties must report this income for the year in which the transaction is performed. How you report your transactions depends on which form of bartering takes place. In most cases, you’ll use Form 1040, Schedule C Profit or Loss from Business, or other business returns such as Form 1065 for Partnerships, Form 1120 for Corporations, or Form 1120-S for Small Business Corporations.
You might still imagine bartering to be like a crowded swap meet, with people yelling and pushing you. Actually, the internet has allowed bartering to get a lot fancier than that and now there are even things like organized barter exchanges. A barter exchange organizes a marketplace where members buy and sell products and services among themselves. If you choose to use such a marketplace, every year you’ll have to fill out Form 1099-B, Proceeds from Broker and Barter Exchange Transactions.
You, yourself, might find that you really like bartering – if you start to do it a lot, congratulations, you may have started what the IRS calls a “barter business.” Once you’re established enough, you can even deduct business expenses. Or you might have a regular business and are simply using barter transactions to help your sales; then you’ll have to include those sales in your business income.
If you really want to be a savvy barterer, here’s a tip: never barter outside of your industry. When you mix two different types of businesses, one party of the bartering partners will always feel short-changed. That’s why a uniform currency was invented in the first place. So, stick with the same business if you want to barter – otherwise, just pay for each other’s services and be done with it!
The IRS provides a Bartering Tax Center for all of your bartering needs. And no, you don’t need to trade anything to read it!
On the Money,
Sufen Wang
Wang Solutions
RTRP Program Up in the Air: Testing and Continuing Education are Voluntary
Required is the key word in all of this. The IRS filed a motion to suspend the injunction, which was denied on Feb.1 by the same judge. However, he did clarify that the IRS can allow preparers to “voluntarily obtain credentials that might distinguish them from other preparers.” Thus, the IRS’ testing and continuing-education centers will remain open. Indeed, it might be a good idea to complete the RTRP requirements anyways: the IRS can appeal the judge’s full ruling and his decision could eventually be reversed.
And what does all this mean for us, the tax payers? Always check your tax preparer‘s background, credentials and ask for references! “Google” the tax preparer’s name and check out his/her background as much as you are able before you make the hiring. Just because it is NOT required to be licensed, does not mean that anyone off the street can and should prepare your tax returns! Hire a reputable tax preparer will paid off in the long run!
Wang Solutions 