Best IRS phone scam – 844-271-8465

I recently received an email from a tax client with a very serious tax problem that my tax law firm has been handling. My tax client was very concerned that the Internal Revenue Service left him a threating message on his home telephone number. The telephone number that my client was to call back to speak with the IRS was 844-271-8465. Since my client actually has a serious tax problem, and since he was smart enough to hire a tax attorney to fight for IRS tax relief, he rightfully contacted me. Based on the stage of his tax problem, he wouldn’t be receiving any calls from IRS collections.

I told him that it was likely a scam. He was adamant that it was not. He said that he called the number and it was definitely IRS collections and he hung up immediately. Out of curiosity I called the number. When calling, the number did sound like the IRS collection line to the untrained ear. The call started with a “welcome to the IRS” prompt. “Push one for a business issue, two for a personal issue” or something of the like. The recording sounded like it was actually recorded from a phone calling the Internal Revenue Service. Then, the phone went immediately to a person without me needing to push a button. Because I didn’t have to wait an hour or two to speak with anyone, this was a huge red flag that this was not an IRS number.

The person who answered my call had a very thick accent, didn’t introduce themselves or provide me with a federal identification number. The person who answered the phone instantly raised his voice and told me that I owed the IRS and I had to pay him. I found this laughable because I was calling from a blocked telephone number and I didn’t tell him who I was. I asked him for his name, identification number and what Internal Revenue Service collection unit he was in. He fumbled a bit and said, “um … you can call me ‘Jack’”. He also told me that he didn’t have to provide me with his identification number and again demanded a payment.

Based on the absurdity of this joker, I’m surprised that anyone would be duped by this scam. But, apparently some people are indeed being scammed. According to the Treasury Inspector General for Tax Administration, they are aware of nearly 3,000 victims who have collectively paid over $14 million as a result of this type of IRS scam.

The IRS has been warning of such scams for the past couple years now. I think I have had a call or two myself, between other scams to update my computer, or lend money to a Nigerian prince. But this is the first scam that I’ve experienced where the voice prompts for the number imitates the actual Internal Revenue Service collection number voice prompt. I’m sure it’s been going on for a while as the IRS reports that the caller identification for these numbers also reveal that the number belongs to the Internal Revenue Service or other law enforcement.

These scammers may be scary and persuasive if you, like my tax client, actually have a legitimate IRS tax matter you are trying to resolve. However, if you know that you don’t have tax issues you should not be swayed by these scammer’s tactics. If you’re not sure if you have tax problems, this may be the time to confirm whether you have any lingering tax issues. Our tax attorneys are located in Modesto, California and Sacramento, California. We can help you determine if you have a real tax issue or help you get the tax relief appropriate for your situation. Please call us at (800) 454-7043 for your free consultation.

New taxpayer Bill of Rights offers no new protections

This week the IRS adopted a “Taxpayer Bill of Rights”. Unfortunately, the IRS admitted that no new taxpayer rights or protections were created. The newly released taxpayer Bill of Rights simply organizes various policies from the tax code and groups them into 10 broad categories.

The thought is that highlighting these already existing protections will make them more visible and easier for taxpayers to understand.

Here are the 10 broad rights the IRS are going to publicize through this version of the taxpayer Bill of Rights:

  1. The Right to Be Informed
  2. The Right to Quality Service
  3. The Right to Pay No More than the Correct Amount of Tax
  4. The Right to Challenge the IRS’s Position and Be Heard
  5. The Right to Appeal an IRS Decision in an Independent Forum
  6. The Right to Finality
  7. The Right to Privacy
  8. The Right to Confidentiality
  9. The Right to Retain Representation
  10. The Right to a Fair and Just Tax System

 While poking a little bit of fun at the IRS, I believe this version would be more accurate:

  1. The Right to Be Informed (so long as you still open mail sent to the address you lived at years ago);
  2. The Right to Quality Service (similar to any other poorly structured organization);
  3. The Right to Pay No More than the Correct Amount of Tax (plus the penalties and interest that we will charge you to tell you that we don’t think you paid the correct amount of tax);
  4. The Right to Challenge the IRS’s Position and Be Heard (unless we disagree with your position);
  5. The Right to Appeal an IRS Decision in an Independent Forum (which is funded by the IRS);
  6. The Right to Finality (when you die);
  7. The Right to Privacy (unless you owe us money);
  8. The Right to Confidentiality (unless you owe us money);
  9. The Right to Retain Representation (which you will need);
  10. The Right to a Fair and Just Tax System (similar to the justice system).

The IRS plans on displaying their new Taxpayer Bill of Rights conspicuously throughout their offices. I’m debating whether I should post my version in our law firm’s offices.

Beware of the “Turbo Tax audit”

With advancements in tax software and technology, it’s rare to find tax returns that are filled out by hand; without the assistance of a tax preparer or tax preparation software. These advancements have given rise to a whole market of self-preparation software. The most popular is Turbo Tax, but there are others.

With the popularity of these self-preparation tools and software, have come the aftermath, the Internal Revenue Service (IRS) tax audit. I personally like self-preparation tax software tools, like Turbo Tax, because they have led to business for me in what IRS examiners refer to as a “Turbo Tax Audit”. The key with the do-it-yourself software is whether you, the tax preparer, know what you’re doing because you don’t get the professional representation you didn’t pay for.

The software is advertised as easy to use and typically uses question and answer formats. To prepare your tax return, you answer questions posed by the tax preparation software, and plug in your data, and then your taxes are done. When there is trouble, it’s usually rooted in whether the tax preparer (you), answered the questions correctly for the purposes of the tax return. Because the computer software doesn’t know you or your situation, this is where you need to have some knowledge of taxes in general to ensure that you’re not taken on a path that will lead you to an appointment with my office, and eventually the IRS.

The self-preparation software sometimes offers “audit protection.” However, be sure to read the fine print as to the limitations and conditions of such “protection” should you want it, as there may be circumstances where your audit “insurance” is not covered. And, you’re again in my office or facing the IRS alone.

Tax Deadline Tomorrow! Are You Prepared?

There’s a tax deadline tomorrow causing many people to work on their taxes into the wee hours tonight. Even though the federal government is closed, the second tax day is tomorrow, October 15, 2013. This second tax day is the deadline to file your personal federal tax return with the Internal Revenue Service (IRS) if you filed an extension to file your taxes by April 15, 2013, the first tax day.

On September 26, 2013, the IRS announced that “many of the more than 12 million taxpayers who requested an automatic six-month extension this year have yet to file.” These are likely the people that are going to be up late tonight enjoying tax returns instead of playoff baseball and Monday night football. Individuals and their tax preparers alike are guilty of procrastinating until this upcoming second tax day to prepare and file their tax returns.

Many people file a tax extension in April once they prepare their tax return and determine that they’re going to owe a tax liability. Others just need additional time to review their finances and prepare their tax returns. In either case, filing a timely tax extension in April only allows taxpayers extra time to get their tax returns filed. However, an extension to file does not extend the time that taxpayers have to pay any tax due on their tax return. This is often overlooked or simply ignored by taxpayers when requesting a tax filing extension.

If you filed an extension to file but owe a balance due, you will owe interest on any amount not paid by the April 15 tax filing deadline, plus you may owe penalties. The late payment penalty is generally ½ of 1% of any tax not paid by the original filing deadline of April 15, 2013. It is charged when reasonable cause for non-payment is not established, for each month or part of a month the tax is unpaid maxing out at 25%. Fear of not being able to pay the tax due often causes individuals to not file their tax returns, even if they have an extension to file. They’re often delaying the inevitable.

The IRS promotes payment plans to the public to entice the public to file their tax returns even if they cannot immediately pay the entire tax liability. Beware however, as the IRS is a collection machine, their job is to collect the debt owed; assuming of course that they return to work.

There are different types of payments plans allowed by law that may better fit your budget than the IRS may share with you, unless you know the rules. The IRS has a hardship program called currently non collectible status for taxpayers that are unable to pay the tax debt owed. Additionally, the IRS has a debt settlement program for tax payers that can prove that it is in the government’s best interest to collect less money than what is owed, this is called an offer in compromise. The point is that there are options available for taxpayers that cannot pay their taxes owed. The first step is to file your tax return, preferably before tomorrow’s second tax day deadline.

IRS closed – technical difficulties or government shutdown?

Because our elected representatives can’t do their job, the government has shutdown. The Internal Revenue Service (IRS) is not immune from the shutdown … but you are still responsible to make payments and meet IRS deadlines.

Curious as to how the government shutdown would impact the IRS collection officers I face off against on a daily basis; I started to make my normal phone calls to the IRS today. The IRS practitioner’s line has a pre-recorded message acknowledging that it is closed due to the government shutdown. The standard collections phone number used by the public at large has a pre-recorded message that it is having technical difficulties. I called a small sample of Revenue Officers that I know and got their voice messages (no surprise there). I also called a couple of the duty lines at my local IRS office. The duty lines were not staffed. One had a rather funny message recorded either yesterday or today, acknowledging the government shutdown and then the person recording the message was either yanked off the phone or spat a profanity into the message.

According to the IRS website, they softly acknowledge the government shutdown as follows:

“Due to the current lapse in appropriations, IRS operations are limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.”

Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as they are required to do so by law. The IRS will accept and process all tax returns with payments, but will be unable to issue refunds during this time. Taxpayers are urged to file electronically, because most of these returns will be processed automatically.

If you have an upcoming appointment scheduled with the IRS, you should assume that the appointment is cancelled and will be rescheduled. The IRS will also continue to send its scary collection notices; however, correspondences received will not be reviewed (again, not a real surprise announcement).

I suppose what I’m really waiting for is for a prospective client to contact me with a stack of IRS levy notices that were issued at the eleventh hour on September 30, 2013 by an IRS official knowing they were going on a forced holiday for an undetermined amount of time.

When do you need to file an amended tax return?

This is the time of the “tax year” that little tax issues on your recently filed tax return usually come to light. You thought your taxes were done when you filed your tax return in April. Well, you may have some more work to do.

The “little issues” may include the discovery of the misfiled or belatedly received income statement, the discovery of a corrected income statement, or remembering that it was (or wasn’t) your turn to claim a shared dependent. The amended tax return, simplified, is a tool often used in one of two ways; 1) to make changes to a filed tax return for the taxpayer’s benefit, or 2) to make changes to a filed tax return for the government’s benefit.

Taxpayer Will Benefit From Amending the Tax Return

The use of an amended tax return is the tool to use when you notice that you paid too much tax or you were due more money back from the government than you received on your original tax return. The government isn’t likely going to make an adjustment when the unadjusted return is in their favor. Therefore, you’re going to need to push the issue to ensure you don’t pay more taxes than you’re legally obligated to pay.

This may include correcting your filing status or the number of dependents to your benefit, or claiming credits you were entitled to claim, but didn’t, on your original tax return. Although more rare, sometimes there are changes in the law that are retroactive and allow you to amend your tax return for a past tax year to take advantage of the change to the law.

In the present age of initial computer review of your tax return, calculation or transposition errors are normally caught fairly quickly by the IRS and normally do not require amending your tax return, as you will normally be notified of errors or the need for additional information.

If you will receive an additional refund by filing an amended tax return, you should normally wait until you have received the refund due to you as shown on your original tax return before filing your amended tax return. Waiting until the original refund is received may help avoid IRS delays and errors in processing your amended return and the additional refund. Generally, to claim a refund based on an amended tax return, the amended tax return must be filed within three years from the due date of the original tax return or within two years from the date the tax was paid, whichever is later.

The Government Will Benefit From Amending the Tax Return

In cases where amending a tax return will result in a higher tax owed and a tax debt, the taxpayer may drag their feet in filing their amended tax return. This situation may include, for example, the realization that you earned more income than you thought you had at the time you filed your tax return, or you claimed a dependent you were not eligible to claim. The reality is that the IRS, for all their faults, is likely to eventually catch an error that will result in a higher tax owed. The real question most taxpayers in this situation face is whether they can actually pay the increase in tax; and they often opt to wait for the IRS to push the issue.

Similar to calculation and transposition errors that benefit the taxpayer, simple calculation and transposition errors that may benefit the government are likely to be discovered in the initial computer processing of your tax return and don’t necessarily require an amendment. It is the more complex or intentional errors that warrant use of the amended tax return to minimize civil and criminal exposure for disclosures made on your original tax return. The use of the amended tax return will minimize the monetary penalties and interest assessed if amended before the IRS corrects the return for you. Like any tax issue, a proactive and organized approach will save you money over time.

IRS Closed Tomorrow – That Levy Release Will Have to Wait as the Potluck has Begun

The Potlucks have begun in the bowels of the Internal Revenue Service (IRS) today in celebration of what is essentially a four-day weekend.  The Tax Battalion notified you on April 22, 2013, of the news announced by the IRS on May 15, 2013, that they would be closed additional days due to federal budget woes.

The IRS closures are scheduled for May 24 (tomorrow), June 14, July 5, July 22 and Aug. 30, 2013. Each of these closure or furlough days are conveniently scheduled to coincide with a federal holiday, manufacturing a four-day weekend for those people who collect your taxes, but not for those who owe the taxes (this isn’t necessarily true, click to read more about IRS Employees Tax Debt).

Beginning (officially) tomorrow IRS operations will be closed. This means that all IRS offices, including all toll-free hotlines, the Taxpayer Advocate Service and the agency’s nearly 400 taxpayer assistance centers nationwide, will be closed. IRS employees will be furloughed without pay. No tax returns will be processed and no compliance-related activities will take place.

The IRS while firing up the BBQ noted, of course, that taxpayers should continue to file their returns and pay any taxes due as usual. However, since none of the furlough days are considered federal holidays, the shutdown will have no impact on any tax-filing deadlines. The IRS will be unable to accept or acknowledge receipt of electronically-filed returns on any day the agency is shut down. However, where the last day for responding to an IRS request falls on a furlough day, the taxpayer will have until the next business day. The short of it is, if you haven’t obtained that bank levy release yet, it’s not going to happen until the IRS returns to work with a suntan and a full belly on Tuesday, May 28, 2013.

Your 2012 and 2013 Federal Tax Returns Are At Risk!

Today, National Taxpayer Advocate Nina E. Olson reported to Congress the issues that the Taxpayer Advocate Service (TAS) will focus on during the upcoming fiscal year. Olson, expressed particular concern, among other issues, about the taxpayer impact of expired and expiring tax provisions.

“The continual enactment of significant tax law and extender provisions late in the year has led to IRS delays in handling millions of taxpayers’ returns and caused many taxpayers to underclaim benefits because they did not know what the law was … Because of the magnitude of these challenges and the uncertainty about such a large number of important provisions, the 2013 filing season is already at risk. The 2013 filing season is likely to pose problems for many (if not most) taxpayers and the IRS if Congress does not address the many provisions that have already expired or soon will.” Wrote Olson.

You may be asking, “How does this affect me?” Well, if Congress doesn’t act soon you may need to hire an experienced tax attorney to fight for tax relief. As my Federal Income Tax professor repeatedly ordered in law school: “Read on, read on, read on…”.

The following provisions are among the tax provisions that expired at the end of 2011:

  • The so-called “Alternative Minimum Tax patch.” As result, an estimated 27 million more taxpayers are subject to the Alternative Minimum Tax this year.
  • The deduction for state and local sales taxes.  About 11 million taxpayers claimed this deduction last year.
  • The deduction for mortgage insurance premiums.  About four million taxpayers recently claimed this deduction.
  • A provision allowing persons over age 70-1/2 to make tax-free withdrawals from their Individual Retirement Accounts (IRAs) to make charitable contributions.

According to the IRS website, Congress is likely to extend many of these and other expired provisions retroactive to January 1, 2012, but neither taxpayers nor the IRS know for sure what will happen and taxpayers, therefore, cannot make educated tax planning decisions now.

In addition to the provisions that expired at the end of tax year 2011, an even larger number of provisions are set to expire at the end of 2012. Such rules include the Bush-era cuts in marginal tax rates, reduced tax rates on dividends and long-term capital gains, various marriage penalty relief provisions, certain components of the child tax credit, the earned income tax credit, and the adoption credit, and the moratoria on the phase-outs of itemized deductions and personal exemptions.

IRS Enforcement of ObamaCare

As you may know, the IRS is supposed to be the agency to oversee enforcement of the new health care law, in the event that it does not get thrown out.  Perhaps the reasoning there was, they’ve been so good at denying tax relief over the years, they’re now ready for more responsibilities.

But the IRS really doesn’t want this additional duty.  They would have to hire 4,000 new employees, and they would have to train them (along with their current personnel) to do something they have never done before.  Furthermore, the IRS definitely doesn’t want to have to deal with all the thorny privacy issues that would crop up.

Apparently the IRS is moving forward with the hiring spree without waiting to see if ObamaCare makes it or not.  As some point out, it’s not only about ObamaCare; they are needed to enforce the current tax laws and collect taxes regardless of what happens.

See the recent Fox News debate.  Steve Forbes expresses probably some of the most bold opinions in this short debate.  He thinks that the numbers used to convince Congress to pour more money into the IRS have been spun — the idea that through IRS enforcement efforts, the government collects $4 in revenue for every $1 spent to collect is bogus.

Forbes and others agree that our focus should be on simplifying the tax code, not spending more on enforcement.

The Low Down on P&I

Most words and phrases don’t get an abbreviation or an acronym unless they’re used with a certain degree of frequency.  Unfortunately, in the tax debt business, “Penalties and Interest” has earned the nickname “P&I” because, yes, they are just that common.  If you wonder why you owe so much now when the original tax due was far less, here’s the low down:
Penalty for Filing Late
5% of the unpaid tax for each month the return is late (up to maximum of 25%).  This penalty is not avoided by filing for an automatic 6-month extension.
Penalty for Paying Late
.5% (1/2 of 1 percent) of the unpaid tax for each month after the tax is due, increasing to a full 1% per month after formal demand for payment is made (up to maximum of 25%).  This penalty can be avoided by filing an extension, but only if at least 90 percent of the tax liability is paid by the original due date.
The late payment penalty is reduced to .25% per month during any month that a valid installment agreement is in place so long as the return was filed on time.  See IRS website for additional information.
The interest rate on unpaid taxes is the federal short-term rate plus 3 percent, calculated every three months.  The IRS is required by law to charge interest on unpaid back taxes.  This cannot be avoided.