Tax Day 2015 Has Arrived!

Free food is great and all, but is that really what you want on Tax Day?  I suppose if you’ve already filed and you’re just waiting for a refund check, then you may have an appetite for a free Hard Rock Cafe burger, a Schlotzksky’s sandwich, or red velvet cake at Tony Roma’s.  But if you’re like many other taxpayers, you have had to work for every dime you earn and you maybe haven’t had time to get your taxes done yet.  Of course, it is also difficult to be motivated to file when you know you’re going to owe.  It you fit this description, then maybe you’re looking for a more valuable bit of Tax Day info, like how to file an extension.

Keep in mind that the automatic extension is “automatic” because it is granted to anyone who asks without the need to show reasonable cause, not because it happens automatically.  You have to so something.  You have to ask for it**.  The IRS website is extremely sluggish right now due to all the extra traffic it gets this time of year, but requesting an extension online using Form 4868 is still the fastest and most convenient way to do it.

You can file it with your electronic payment, through your tax filing software, or through your tax professional.  You’ll need your name, address, and social security number.  You will also be asked to estimate your 2014 tax liability, provide the amount you have paid towards that liability (if any), the amount you are sending in with the form (if any), and lastly, the total remaining liability.

So, what do you get when you file an extension?  How is six extra months?  Congratulations, you may take a deep breath and relax a little because you don’t have to file until October 15th now.  But, there is one big “BUT” associated with filing an automatic extension: an extension to file does not also give you an extension to pay.  If you don’t pay on time then you’ll be charged interest and late payment penalties.

**You don’t even have to request an extension if you are a US citizen living abroad, or if you are serving in the military outside the US.

 
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How to Get Fired if you Work for the IRS

As far as I know, an IRS employee can’t be fired just for leaving you on hold for 3 hours, or for giving you bad information that contradicts what the previous IRS employee told you, or for rejecting your Offer in Compromise (as long as procedures are followed). Of course, there could be additional actions and circumstances that might warrant termination, but generally speaking, these are not adequate grounds.

But according to rules established during the 1998 tax code reform, an IRS employee is supposed to be fired for the following actions unless the Commish determines that the employee should be given a second chance due to the presence of mitigating factors:

  • Purposely failing to obtain signatures required prior to certain asset seizures;
  • Lying under oath relevant to matters involving a taxpayer account;
  • destroying or falsifying evidence relevant to matters involving a taxpayer account;
  • Assault or battery of a taxpayer or fellow employee (that’s comforting, knowing that an IRS employee will likely get fired for cold-cocking a taxpayer) — but only if there is a conviction;
  • Purposely violating a provision in the IRC, Regs, IRM, or internal policies for the purpose of retaliating against or harassing a taxpayer or fellow employee;
  • Willful failure to file a tax return or underreporting income on a tax return…

There are others, but this list is getting tedious.  It’s funny to me that some of these prohibitions are related to actions against other IRS employees.  Don’t they get along over at the IRS, or what?

A House Committee has introduced a bill that would add another bullet point to this list above. H.R. 709, the Prevent Targeting at the IRS Act, would require the firing of IRS employees who act in their official capacity to target entities or individuals for personal or political reasons.  And presumably any offending employee would have to be fired regardless of how merciful the Commissioner wants to be.  Thank you Robert Wood for the info on H.R. 709.

In the meantime, I’ll keep an eye out for the Prevent Stupidity at the IRS Act.

 
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IRS Impersonation Scams More Prevelant Than Ever

TIGTA big shot, Timothy Camus, recently testified before the US Senate Finance Committee on the topic of “Tax Schemes and Scams.”  By TIGTA, I of course mean the Treasury Inspector General for Tax Administration.  And by “big shot,” I of course mean that he is the Deputy Inspector General for Investigations, and he wears a nice looking mustache, and he tells tax criminals that their day will come.

According to his testimony, IRS phone impersonation scams have quickly become one of TIGTA’s top concerns.  The agency had received only scattered reports of phone scams prior to the summer of 2013.  TIGTA started to track this crime in October 2013, and ever since then has kept statistics and concentrated efforts on eradicating this terrible, frustrating crime.

The way it works is the scammers call and threaten you with criminal penalties if you don’t pay a certain sum to address a tax problem that usually doesn’t even exist.  The victim is asked to load money onto a prepaid debit card and then call back with the card number.  These criminals used to target primarily the elderly or recent immigrants; the most vulnerable people who do not have sufficient command of the English language and/or those who do not have an understanding of the US tax system.  But Camus says that they have not been discriminating much lately.  He describes having received a call himself, at home, the weekend before his speech, and he told the guy, “your day will come.”  I have received phone scam calls too, most recently a very generic sounding recording using robo-call technology.

Here are some of the key phone scam statistics from Camus’ Senate testimony:

  • TIGTA has received over 366,000 complaints of phone scam calls (9,000 – 12,000 per week)
  • 3,052 victims paid out about $15.5 million
  • one poor fool paid over $500,000
  • 296 of these victims gave more than just money (i.e., social security number or other sensitive identifying information)

Camus says that this scam is the subject of an “ongoing multi-agency investigation.”  Let’s hope they figure out how to catch these guys because the IRS public service messages about how to avoid phone scams aren’t working as effectively as they should.

 
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The IRS Has Wisely Steered Clear of Instagram

The IRS’ use of social media has always seemed sort of awkward to me.  There’s the IRS Facebook account, for example.  Completely bare bones.  A couple pictures of IRS national headquarters, a blurb about this not being an official source of information about the IRS, and links to the official IRS homepage.   Zzzzzzzzzz.

Yes, I know it has 38,000 likes.  But you have to wonder if these people really “like” the IRS, or if they are acknowledging the IRS in the only way that Facebook allows, there being no “unlike” button.

The IRS doesn’t have an Instagram account.  Their complete social media portfolio includes Facebook, Twitter, YouTube, Tumblr, and IRS2Go, their mobile app (which I’m not sure really counts as social media).  But thank goodness they don’t; there is nothing really visual about what they do.  One look at an tax law firm Facebook page will confirm that.  What kinds of pictures would they post? Suits and cubicles, Friday potlucks, maybe some of the stuff they have seized and sold at auction?

Just for fun, I looked at some of the 46,738 photos with an IRS hashtag and they are nothing special.  Most of the #IRS posts are advertisements.  The second most common, as far as I can tell, are pictures that have nothing to do with the Internal Revenue Service.  Maybe IRS means something else in another country, that’s what I’m thinking.  Lots of Ford Mustangs – maybe a special edition or some fancy tuning.  By far the best ones are the memes.  There is one meme of a guy sitting in his car with a tethered cheetah sitting shotgun that says “When you get your tax return and start buying unnecessary sh*t.”  There are a few memes of skeletons “waiting for their tax refund” or “waiting at the IRS office.”  There is a cartoon in the style of Far Side (accredited to “Reynolds”) that shows a couple sitting at the IRS office.  The sign says “THE IRS” and the guy turns to his wife and says, “Like the sign says . . . it’s all THEIRS.”  My favorite, probably because I can identify with it best, is a screenshot of a cell phone displaying the IRS toll free phone number and the call timer at 50 minutes.  The caption: “This is why no one likes the #IRS…”  Thank you for that @caitlinmaguffee.  It helps to have a good sense of humor this time of year.

 
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FTB Call-Back Service

There are many things that the California Franchise Tax Board (FTB) does that I would hope the IRS never adopts.  But some might appreciate it if the IRS would follow the example of the FTB when it comes to their customer service phone lines.

Clearly the IRS could never deliver the same level of customer service as a state taxing entity, due to the insanely large number of calls that IRS gets each day.  I don’t think anybody really expects them to compete on that level.  Likewise, it is naive to think that the state should be able to answer every call as it comes in without leaving taxpayers on hold.  However, FTB has figured out a way to make it much more convenient for the caller.  The FTB phone system has a feature that allows the taxpayer to request a call-back during times of heavy call volume.  The system estimates about how long you’ll have to wait on hold if you choose to hold, and then gives you the option of leaving your name and number and having a customer service rep call you back during that same time frame.

This call-back feature is handy for tax attorneys and tax practitioners, but it is especially useful for unrepresented taxpayers.  I have used the call-back feature a few times, but I typically do not mind holding either.  I often have a handful of cases that are queued up and ready to go once they pick up, and while I wait there’s always Instagram and TIGTA reports, but mostly Instagram.  But taxpayers calling in on their own case can be really discouraged by a 30+ minute wait, and it is nice to have the option of saving your place in line without actually waiting on the line.

I understand the administrative burden this feature would cause though.  It’s not a huge amount of extra work, but even a little extra work on such a large scale can be reason enough to just maintain the status quo.  IRS customer service has really gone down the toilet in the last few years, so really status quo wouldn’t seem too awful right about now compared to any additional slippage in service.

 
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IRS Audit Percentages Still Dropping

I have written before about the federal budget cuts and reduction of IRS personnel and what sorts of implications this has on the typical taxpayer.  One of the most noticeable consequences is that when you pick up the phone with a tax question or an inquiry into your tax account, you have about a 50/50 chance of getting through and speaking with someone.  Customer service is at an all-time low.

But something else has hit a record low, at least in the last ten years.  And that something is Audits.  Less than 1 percent of tax returns were selected for audit in 2014, and even fewer will be audited this year.

Obviously this is very good news for the taxpayer, but very frustrating for IRS executives, including Commissioner Koskinen, who stated that this trend “carries serious implications for our tax system and the nation.”  I can’t say for sure, but I’d assume that at least one implication is less revenue.  That’s my attempt at a joke.  Of course that’s one of the implications.  They are the Internal Revenue Service.  What’s the point if they’re not bringing in revenue?  Which leads me to an interesting question: Assuming it is true that your chances of being audited are the lowest they have been in 10 years because there are only about 11,600 revenue agents (and dropping) conducting audits, if you are selected, what are the chances of walking away unscathed?

The fact is some tax return audits result in zero liability.  But I could see that becoming a thing of the past.  First, I could see the IRS becoming more selective in the returns it picks for audit.  They will pick the returns with more obvious issues; ones that will more likely result in additional revenue for the government.  Second, I could see the IRS becoming more rigorous in their audit techniques.  If the overall number of audits is low, then the IRS has to be more “effective” in their audits to keep the revenue flowing.  I apologize in advance for this obnoxious analogy, but a boa constrictor often goes months in between meals, so when it does capture its prey, it is not going to let go before it squeezes the life out of them.  We’ll keep an eye on the IRS and see if these snaky predictions come true.

 
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800,000 Obamacare Enrollees Received Incorrect Tax Forms

Here’s a suggestion for the IRS’ next Tax Tips article: “What you should know about the incompetence of the IRS.” Or maybe this one: “10 reasons why you should not renounce your citizenship and move to Brazil.”  Their latest screw up came on Friday — or at least it was announced on Friday — that 800,000 Obamacare enrollees were sent the wrong tax forms and will need to wait until sometime in March to file their taxes.  Yet another reason to not be so eager about filing early.  And what about those conscientious tax return filers who already pulled the trigger?  Well, the Obama administration hasn’t quite figured out what to do with them yet.

Just keep checking in with the IRS on their website.  That’s where the IRS likes to funnel all inquiries these days.  They don’t have enough employees in their call centers to answer the phones usually; I would definitely not recommend you try calling.  I’m sure there will be some sort of extension for those who already filed using the wrong forms.  The Obama administration is great about accommodating people with extensions.  It will be all over the internet, just be sure you are looking to reputable news sources for you info.

There are always ways to describe Obamacare (or IRS) blunders so that it highlights the administration’s incompetence:

The White House tells us in a classic Friday news dump that nearly one million Americans could see their tax refunds delayed because of this president’s inability to implement his own law.

~ Diane Black, Rep Tenn

Not a full-blown “spin” though, in my opinion, because they very well could see their tax refunds delayed.  Years from now we will be able to look back, with experience and time giving us a better perspective, and determine if this is one of several innocent mistakes or if the government really did fail in the administration of Obamacare.  I know a lot of people believe we can make that call now, and would say that it has been a complete flop, not only the administration of the new law, but the whole idea of it in the first place.

 
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More than half of Stanislaus’ FTB non-filers live in Modesto

The Franchise Tax Board is beginning its annual force filing season. Haven’t heard of force filing season? If you are one of the million plus people that the FTB is currently investigating, you will soon.

Force filing season is where a taxing government seeks to file an estimated tax return for you, when the government did not receive a tax return from you. The procedure is a profitable one. Last year the FTB collected more than $715 million through its force filing investigation and assessment efforts.

Since we’re now in tax season, the FTB knows that you should be thinking about your taxes. So, this is the time of year that the Franchise Tax Board notifies taxpayers that it didn’t receive a tax return from a particular tax payer and that it believes that a tax return should have been filed.

If you live in Stanislaus County, in Modesto particularly, you may need to contact a Modesto tax attorney in short time. Of the 6,696 Stanislaus taxpayers that the FTB is investigating, 3,570 of them live in Modesto. That’s more than half of the Stanislaus taxpayers that will likely need a Modesto tax attorney.

The first step in the force filing investigation is for the Franchise Tax Board to identify social security numbers where a tax return was not received by the tax return deadline. The FTB then compares those social security numbers to information provided by banks, employers, local governments, the IRS, and other third parties. If the Franchise Tax Board believes that you were required to file a California tax return, but did not do so, you will receive a tax return demand letter.

So if you are one of the 3,570 Modesto residents that recently received one of these tax demand letters, or one of the remaining 3,126 who live elsewhere in Stanislaus County, you have a potential tax debt looming. Our Modesto tax law firm may be able to help you. Speak directly to one of our Modesto tax attorneys by calling us at (209) 248-7157.

 
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Will IRS Lighten up on Structuring?

By law, you must report to the IRS bank transactions of $10,000 or more.  It is one government tool for curbing white collar crimes.  Manipulating deposits so that they come just under the reporting requirement is called “structuring,” and it is illegal.  The IRS can seize bank accounts without notice to the account holder when structuring is suspected, and they have done so freely in the past, even if the money is obtained legally.

It is obvious to Commissioner Koskinen that this policy is way too harsh.  Today the commissioner apologized to taxpayers who have not been treated fairly “under the code.”  I don’t know how to take this apology.  It seems a little half-hearted to me.  It’s like saying, “we are sorry for seizing the accounts of law-abiding citizens, but we were only doing what we are permitted to do under the code.”  And it’s not necessarily a win for taxpayers until some changes are made to the code.  Semantics aside, it looks like a step in the right direction.

 
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Short Hold Times at IRS Today

Modesto, CA

I only spent about two minutes on the phone with the IRS today.  That’s a first.

I was on and off just like that, and then I went on with my day.  The reason why it was so quick is because THEY DIDN’T TAKE MY CALL.  You know things are bad when they won’t even allow you to wait on hold.  Last week we were experiencing two hour hold times.  Actually, it could have been longer, but the longest I waited (and still didn’t get help) was two hours.  But this week they don’t even want you to bother holding.  After selecting my topic (“discuss a client’s tax account”) the recording on the Practitioner Priority Line states something like “We’re sorry, but due to extremely high call volumes and the topic you requested, we are unable to take your call at this time.  Please try again later, or on the following business day.”

It has always bothered me when I am in a store asking for help or waiting to make a purchase (almost any type of store; they’re all basically the same) and then the phone rings, and the worker immediately picks up the phone and helps the caller despite the fact that I am present in the store.  I have noticed that they will normally give preference to the caller over the person who is there in person.  Not so with the IRS.

Well, to be fair, I don’t think they get foot traffic at the IRS call centers.  I’m pretty sure that the call centers are just for calls and the walk-in centers are just for walk-ins and appointments.  But realizing this only makes me madder that they can’t answer my call.  They don’t have to divide their attention between callers and walk-ins.  There’s no excuse!  HOWEVER, as much as I love to complain about the IRS and the pathetic state of their call centers, I like my chances on the phone even better than at our local office.

If anyone near Modesto wants to take their chances at the IRS local office, be my guest.  They are at 1700 Standiford Ave. and they are open Monday through Friday from 8:30 to 4:30.  And the Sacramento office is still at 4330 Watt Ave.  Same hours of operation.

 
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