California FTB frustrated the poop out of someone this week

Are you frustrated with California’s Franchise Tax Board? The Sacramento tax collectors at the Franchise Tax Board must have frustrated, or possibly scared the poop out of someone recently with their collection efforts. For obvious reasons, in a story not widely publicized this week, someone recently took FTB tax relief to a lower level.

Earlier this week a package sent to the Sacramento FTB office containing a brown liquid with a strong odor required the Sacramento Metro Fire Department to be summoned. Franchise Tax Board personnel, possibly working to assess and collect taxes against the sender of the anonymous package, had to emerge from the bowels of their Sacramento taxing office as a level two hazmat emergency caused an evacuation. The cause … dog poop!

Based on the stress and sleepless nights caused by FTB tax audits and Franchise Tax Board tax collections, I’m surprised it was only dog poop that was sent. Apparently, you can order a variety of crap through the internet. Literally, ranging from elephant crap to cow dung.

Obviously, these types of tax relief tactics are not tax relief at all. They’re a useless waste of time and dangerous. The sender will also likely be in more trouble now than they would have been had they used actual tax law strategy to resolve a tax problem and build a collection defense. Using legitimate legal means to resolve a tax debt will often relieve the stress caused by the taxing agency whether it’s the FTB or the Internal Revenue Service.

New Modesto tax relief announced

The City of Modesto recently announced details of a new tax relief and cash incentive program to lure businesses to downtown Modesto. The tax breaks apply variably to new businesses and existing businesses.

The new Modesto tax relief program will be available to businesses located on 10th Street between K Street and H Street; 11th Street between K Street and I Street; and J Street between 9th Street and McHenry Avenue.

New Modesto retail businesses will be eligible for a full refund of Modesto City mill taxes and local sales taxes for the first year of business. Existing Modesto retail businesses that extend their hours will be eligible for a refund of Modesto local sales tax only collected during the extended hours for one year.

The City of Modesto is also promoting cash incentives for job creation in the downtown Modesto area for both retail and non-retail businesses. Other incentives are available for new developments and physical improvements. Full details of Modesto’s business and development incentive program are available on the City of Modesto’s website.

With an overall improving economy it’s good to see local government risk a short-term loss in tax revenue for the long-term impact new businesses may bring. Hopefully for Modesto, the gamble pays off.

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.

IRS to Cancel Tax Relief Programs?

Is the IRS really warning that emergency tax relief will no longer be allowed? I doubt it. Last week, the IRS issued a warning to taxpayers to safeguard and anticipate information needed for various tax issues in the event of an emergency during this year’s hurricane season. Typically, the IRS offers tax relief to victims and affected areas of natural disasters and other crises, such as the Oklahoma tornados and the Boston marathon bombing.

While the IRS has many many many faults, some of which are just finally being made public, I don’t think even the IRS would disallow emergency tax relief in the event of a hurricane disaster, and then point to their May 29, 2013, news release as warning taxpayers that they should have been more prepared during hurricane season. The warning may be filed under “preventative education”.

The preventative education provided by the IRS are reminders of some of the safeguards that we all know we need to take to keep our financial affairs in order, but will also allow you to maintain tax compliant in the event of an emergency.  This includes:

  • Creating an electronic backup of your records that can be accessed via the internet or other electronic format. Additionally, non-internet backup records should be stored in a secondary location;
  • A photo and video record can help prove the market value of real property and tangible items for insurance and casualty loss claims. Photos should be stored with a friend or family member who lives outside the area. However, these days photos and videos can also be easily uploaded and downloaded online.
  • Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

These precautions may help you be prepared tax-wise in the event of an emergency. While emergency tax relief will likely be offered as emergencies arise, a consultation with a tax relief attorney will ensure that your tax rights are protected even when there isn’t a natural disaster.

IRS Tax Relief Issued in Oklahoma Tornado Zone

Are you going to miss an Internal Revenue Service (IRS) deadline? You better have a good excuse! The IRS with all its fails is usually pretty good about recognizing a legitimate excuse for missing tax deadlines, so long as it applies to the masses. The two-mile wide tornado that caused so much carnage throughout Oklahoma on Monday, has been officially recognized as worthy for tax relief by the IRS.

After being officially declared as a disaster zone by Federal Emergency Management Agency (FEMA), the IRS announced that affected taxpayers in Cleveland, Lincoln, McClain, Oklahoma and Pottawatomie counties will receive special tax relief. Other locations may be added in coming days based on additional damage assessments by FEMA.

Unlike the tax relief issued after the Boston Marathon Bombing which occurred on Tax Day (the deadline to file personal federal tax returns) the IRS deadlines to be missed are less common; but common nonetheless. Beginning on May 18, 2013, affected individuals and businesses will have until Sept. 30, 2013 to file any returns and pay any taxes due. This includes the June 17 and Sept. 16 deadlines for making estimated tax payments. A variety of business tax deadlines are also affected including the July 31 deadline for second quarter payroll and excise tax returns and the Sept. 3 deadline for truckers filing Form 2290 highway use tax returns. The IRS will abate any interest, late-payment or late-filing penalty that would otherwise apply.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can claim those losses on either last year’s tax return or this year’s return. Claiming these casualty loss deductions on either an original or amended 2012 return will get the taxpayer an earlier refund but waiting to claim them on a 2013 return could result in greater tax savings depending upon other income factors.

The Tornado Tax Relief will be automatically provided to any taxpayer located in the disaster area. However, taxpayers who live outside the disaster area but whose books, records or tax professional are located in the affected areas will need to contact the IRS at 866-562-5227 to obtain tax relief.

Boston Marathon Tax Relief

Did you file your tax return yesterday? If not, did you file an extension to file? While your typical tax extension is only an extension to file your actual tax return, but not an extension to pay the tax owed, the Internal Revenue Service announced a three-month tax filing and payment extension to Boston area taxpayers and others affected by Monday’s Boston Marathon explosions.

Smartly, the IRS is allowing geographic and disaster related tax relief. This tax relief applies to all individual taxpayers who live in Suffolk County, Massachusetts. Since the marathon was both a national and international event, the tax relief also applies to victims, families, first responders, others impacted by Monday’s Boston Marathon tragedy who live outside of Suffolk County and other taxpayers whose tax preparers were adversely affected by the tragic events.

“Our hearts go out to the people affected by this tragic event,” said IRS Acting Commissioner Steven T. Miller. “We want victims and others affected by this terrible tragedy to have the time they need to finish their individual tax returns.”

Under this specific tax relief program, the IRS will allow eligible taxpayers until July 15, 2013, to file their 2012 returns and pay any taxes normally due April 15. Normally, non-filing and non-payment IRS penalties are severe and crushing. Under this tax relief program, no filing and payment penalties will be due as long as the tax returns are filed and the payments are made by July 15, 2013. By law, interest, currently at the annual rate of 3 percent compounded daily, will still apply to any payments made after the April deadline.

Unlike other IRS tax relief programs, generally, no specific action is necessary for this program. The IRS will automatically provide this extension to anyone living in Suffolk County. However, action is needed for impacted and qualified taxpayers who reside outside of Suffolk County. Eligible taxpayers living outside Suffolk County can claim this relief by calling 1-866-562-5227 beginning Tuesday, April 23, and identifying themselves to the IRS before filing their tax return or making their tax payment. Eligible taxpayers who receive penalty notices from the IRS can also call this number to have these penalties abated.

Tax Day is Around the Corner; Are You Prepared?

Happy Tax Day! Come Monday April 15, 2013, your tax returns are due. Have you prepared? While many people filed their tax returns well before the April 15 deadline because they gave the government an interest free loan and are due a refund; many other people delay filing their tax return or never file a tax return. These people dread Tax Day because they know that they’re going to owe a tax debt once they actually do file their tax return. So they believe it’s better to not even file. This is not the correct approach.

If you are in the group of people who procrastinate filing their return or do not file your tax returns in fear of a tax debt, given the present Internal Revenue Service (IRS) collection regulations, this needs to be the year you fix your tax problem. If you have a filing requirement, you need to either file a tax return or an extension to file by April 15. Simply ignoring your filing requirement will likely cost you more money in the long-run as failure to file monetary penalties are severe.

Eventually, the IRS is likely to catch up with your shenanigans. If you had sufficient income requiring you to file a tax return, such income was likely reported to the IRS. Once your income is reported, even if you don’t file a tax return, the IRS may eventually file a return on your behalf by using the reported income and minimum deductions to assess a liability against you.  Even if your income isn’t reported, taxing entities have been known to use other means to estimate your income to assess a liability against you.

You’re legally allowed to file an extension to file, so use it if you’re not ready to file your tax return. This is a simple procedure. Many taxpayers fail to file a timely tax return. Or, alternatively, they elect to pay undue taxes by claiming the standard deduction simply for the purpose of meeting the tax day deadline because they don’t think they have the time to itemize and calculate the deductions and credits they are entitled to claim. While an extension to file is not an extension to pay, filing an extension and properly preparing your tax return will likely save you money.  You must file your extension by April 15. If needed, filing an extension will generally allow you until October 15, 2013, to properly prepare your tax return.

So you filed your tax return or you are about to file your tax return, and you owe a non-disputed tax debt… what do you do now? Can you pay the debt? If you can afford to pay the debt owed, paying the debt is usually the least costly option after penalties and interest are factored into the equation. But if you’re like most people who end up owing a tax debt, you likely were not expecting to owe a tax debt and it’s simply another debt you cannot afford to pay.

If this is the case, there is one thing to keep in mind: the IRS is not your friend when you owe a tax debt, they are like any other creditor, they need as much money from you as they can get, as quickly as they can get it. Even with the public relations blitz over the past couple years of a kinder, gentler IRS, keep this in mind as your financial situation needs to control the final resolution of the tax debt. Too often I hear from people owing tax debts who agreed to some outrageous payment plan because the IRS required such payment based on their liability owed and disregarded their actual financial situation.

Therefore, it’s important to know your financial limitations. If you truly cannot pay your tax debt, there are options available to you. However, you need to have an organized and systemic presentation of your circumstances to get the appropriate resolution to your tax headache. While the IRS will likely pressure you to pay your debt in full within 90 – 120 days or make payments including penalties and interest over the next five to six years, there are other options available which include petitioning for non-payment of the debt, to settling the debt for less than the amount owed. The point is that there are options available to you and the key is to file your return, and then address the debt within your financial limits, do not ignore it. And, if you need professional assistance, call the tax relief attorneys at Montgomery & Wetenkamp toll free at (800) 454-7043 for your free consultation. We can help you resolve your tax debt.

Tax Relief For The Home Office Tax Deduction Available in 2013

The home office deduction, while useful, is complex and often the bait for an audit trap. Beginning in tax year 2013, Congress has implemented an optional standard home office deduction in order to make the home office deduction more available to taxpayers in the future.

Pursuant to Internal Revenue Service (IRS) Revenue Procedure 2013-13, beginning next tax season, there will be an optional safe harbor method that individual taxpayers may use to determine the amount of deductible expenses attributable to certain business uses of a residence throughout the tax year. This safe harbor method is an alternative to the burdensome calculation and substantiation of actual expenses needed to satisfy Internal Revenue Code § 280A. This new tax relief procedure is effective beginning on or after January 1, 2013.

These new tax relief provisions allow taxpayers who use their residences for qualifying business purposes to compute the allowable home office expense deduction on the basis of $5 per foot of qualifying home office space per year, up to 300 square feet. The maximum tax deduction allowed when using the new safe harbor provisions is the lesser of $1,500; or the gross income derived from the qualified business use of the home reduced by qualified business deductions.

The new safe harbor option for business home use does away with the previously time consuming calculations and record keeping of actual expenses. However, the traditional calculation method may allow for a greater deduction than allowed under the new safe harbor business home use provisions. Like the decision to take the standard deduction or itemize deductions on your tax return, give yourself time and review your tax situation carefully to ensure you’re not paying excessive taxes in exchange for convenience.

Tax Relief via the Earned Income Tax Credit (EITC)

The Earned Income Tax Credit (EITC) is a refundable tax credit you may be able to take advantage of this tax season to get the tax relief you need. Since the EITC is refundable, this means taxpayers may get money back, even if they have no tax withheld. However, to get the credit, taxpayers need to file a tax return and specifically claim the EITC, even if they don’t have a filing requirement.

Recent changes to the EITC make the credit available to more taxpayers than in years past. Eligibility for the EITC varies based on income and family size. Households with three or more qualifying children will receive a 2012 tax credit of $5,891 if their Adjusted Gross Income (AGI) is less than $45,060 when filing individually or $50,270 when married filing jointly. The equivalent credit for tax year 2011 was $5,751 for individuals with an annual AGI less than $43,998 or $49,078 when married filing jointly.

On the other end of the EITC spectrum, for tax year 2012, households with no qualifying children will receive a $475 tax credit if their AGI is less than $13,980 when filing individually or $19,190 when filing married filing jointly. Similar middle tier credit adjustments are available for taxpayers claiming one or two qualifying children.

Eligibility for the EITC is very fact specific as to eligibility requirements and prone to errors. Even if someone else prepares your tax return, a taxpayer is still responsible for the accuracy their own tax return. Taxpayers should seek tax advice if they are not sure whether they qualify for the EITC. Common EITC errors identified on the IRS website include:

  • Claiming a child who is not a qualifying child.
  • Filing as single or head of household when actually married.
  • Reporting incorrect income or expense amounts.
  • Missing or incorrect Social Security numbers for self, spouse or qualifying children.

While claiming the EITC will get you immediate tax relief, avoiding these common tax errors will give you stress relief.

 

IRS Tax Relief Extended for Hurricane Sandy Victims

The Internal Revenue Service (IRS) has extended tax relief afforded to Hurricane Sandy victims. The IRS normally issues various forms of tax relief after major catastrophic events. For Hurricane Sandy, affected individuals and businesses will have until April 1, 2013, to file returns and pay any taxes due. This includes the fourth quarter individual estimated tax payments, normally due Jan. 15, 2013. It also includes payroll and excise tax returns and accompanying payments for the third and fourth quarters, normally due on Oct. 31, 2012 and Jan. 31, 2013 respectively, and calendar year corporate income tax returns due March 15. It also applies to tax-exempt organizations required to file Form 990 series returns with an original or extended deadline falling during this period.

Additionally, the IRS will abate any interest, late-payment or late-filing penalty that would otherwise apply. The IRS automatically provides this relief to any taxpayer located in the disaster area. Qualifying taxpayers do not need to not contact the IRS to get this type of tax relief.

Beyond the relief provided to taxpayers in the FEMA-designated disaster counties, the IRS will work with any taxpayer who resides outside the disaster area but whose books, records or tax professional are located in the areas affected by Hurricane Sandy. Taxpayers who live outside of the impacted area and think they may qualify for this relief, however, do need to contact the IRS to obtain tax relief.