IRS Introduces Mobile App “IRS2Go 2.0″

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If you own a smartphone, chances are you probably use it throughout the day to post, tweet, like, and follow. Maybe your addicted to Words with Friends or Angry Birds. You’re probably NOT ordering tax transcripts or checking on the status of your refund. But according to the IRS, at least 350,000 of you have the app that allows you to engage in said geeky mobile activities. And who knows, that number may have shot up even further after today’s announcement that the IRS is rolling out the updated version of its mobile app “IRS2Go 2.0.”

I don’t know, there’s something about the IRS and technology that reminds me of the time I witnessed my mother trying to communicate with Siri. A little awkward.

~ John Wetenkamp, tax relief attorney

IRS2Go has 7 main features (#4, #5, and #6 are new in version 2.0):

  1. Get Your Refund Status
  2. Get Tax Updates
  3. Follow Us
  4. Watch Us
  5. Get the Latest News
  6. Get My Tax Record
  7. Contact Us

For whatever reason, I’m doubting that 350,000 downloads figure. How many times have you installed a free app only to uninstall it minutes later after discovering you don’t like it? Does the 350,000 include that scenario? It’s not that the IRS doesn’t know technology. It’s not that the app has completely unusable features either. I just can’t imagine very many people would want to be reminded of their tax obligations (or tax problems) 6,000 times a day — each time they glance at their phone. Most people only want to think about the IRS one time per year, and even then they don’t want to have to ponder the thought for too long.

Mini / Pseudo / “Unreal” Audits

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IRS audits are among the most dreaded tax problems. Even though the IRS audited only 1% of returns in 2010 through traditional audit procedures, the IRS sends “unreal” audit letters (Nina Olson’s term) alerting taxpayers to underreported income and math errors at a much higher rate.  Full-blown audits are infamous for sapping taxpayers’ time, money, and sanity. But the “unreal” audit letters often have a similar effect.

[T]raditional audits are just one way the IRS enforces the tax laws. Increasingly, the IRS is relying on what IRS Taxpayer Advocate Nina Olson calls “unreal” audits. These typically come in the form of a letter alerting you to errors or omissions on your return. While these audits are less intrusive than full-scale audits, they can still cost you real money.

~ Sandra Block, USA Today

Read more here.

The Latest Phishing Expedition

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Phishing: “a scam typically carried out by unsolicited email and/or websites that pose as legitimate sites and lure unsuspecting victims to provide personal and financial information.” A phishing victim often finds himself burdened with tax problems that are not his own. See IRS website for full detailed information about phishing and everything you need to know about identity theft.

Be on the lookout for the following email subject lines in your inbox:

“Urgent update of tax information is requested”

or

“Tax information required within 30 days.”

It is recommended that you delete these emails immediately because it’s a scam. If you do decide to risk opening the email, the text will look something like this:

Dear Account Holder,

In our continuing effort to guarantee that exact data is being sustained on our systems, as well as to provide you better quality of service; INTUIT INC. has participated in the Internal Revenue Service [IRS] Name and TIN Matching Program.

We have discovered, that your name and/or Taxpayer Identification Number, that is stated on your account does not correspond to the data on file with the Social Security Administration.

In order to check the data on your account, please click here.

Regards,
INTUIT INC.

Corporate Headquarters
2632 Marine Way
Mountain View, CA 94043

Thanks to Kelly Philips Erb for pointing out these scam emails from time to time. If bloggers will repost these scams all over the internet, maybe we can minimize the damage to innocent taxpayers.

Should the IRS Take to the Phones?

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When the Taxpayer Advocate Service (TAS) submitted its 2011 annual report to Congress, it emphasized how “the IRS has changed from focusing on personal, local service to automated, centralized processes” and how this shift has hurt the taxpaying public. At least one author has taken this to mean that the IRS might be more effective in its collection efforts if it would pick up the phone and call taxpayers, particularly in the early stages of collections. See “Personal Finance: IRS Calls to Delinquent Taxpayers?” by Susan Tompor.

First, I’m not sure this was what the TAS had in mind.

Second, I’m not sure this is what we would want.

1. The problem with automated processes is that mistakes are common. Taxpayers are people and real people have real, sometimes unique tax problems that computers and automated letters/processes don’t always recognize. This results in delays and issues with fairness, which in turn results in distrust of the IRS. This is the concern that Nina Olson and the TAS has been harping on for years. While TAS is certainly pushing for an IRS with a more human element, I don’t think TAS is recommending they call everyone as soon as they incur a new tax debt.

2.  As Ms. Tompor correctly points out, with identity theft so rampant these days, few people would be comfortable speaking with a caller who purports to be from the IRS and who wants them to provide information such as their social security number, for verification purposes. I think this would be a waste of IRS resources. And while a phone call can be cheaper than the cost of postage, the phone calls would not replace the letters. Knowing the IRS, a confirming letter would have to be mailed after each call confirming the contact and the content of the conversation.

I am definitely in Nina Olson’s corner when it comes to making IRS interaction more helpful and individualized. But there is a time and place for everything, and I don’t think phone calls on standard collection cases are necessary or desirable.

The Tax Collection Pendulum

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They say that clothing fashions tend to repeat themselves over time.  My 20-year-old Metallica T-shirt?  Retro.  Grandma’s 70-year-old dress? Vintage.

Much like the inner-workings of the IRS, right?  Yeah, sort of.  Anyone who has worked in the tax relief industry long enough has seen IRS collection efforts intensify and diminish in repeating cycles over the years.  Well, some believe that the IRS audit pendulum is tipped one way or another depending on the political party of the president.  And I think it’s safe to say that more audits means more revenue collected.

According to the 2005 dissertation by Valentin Estévez at the University of Chicago:

  • Under Democratic presidencies the audit rate of income tax returns is higher than under Republican presidencies even after the inclusion of various political and economic controls.
  • But, during Democratic presidencies the I.R.S. tends to audit fewer individual returns and more corporate returns than during Republican presidencies.

Casey Mulligan, New York Times blogger, agrees.  In fact, he claims that IRS statistics released since 2005 have further supported Estévez’ position.  See full story here.

IRS Sweeping the Nation for Identity Theives

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Yesterday the IRS announced a nation-wide crackdown on suspected identity theft perpetrators.  With the help of DOJ’s Tax Division and local US Attorneys, the IRS conducted a flurry of visits, inquiries, indictments, and arrests over the last week.  The IRS almost seems obsessed with their stats:

  • 939 criminal charges
  • 250 check-cashing operations under audit
  • 105 people targeted in 23 states
  • 69 indictments
  • visits to 150 money services businesses
  • 58 arrests
  • 19 search warrants
  • 10 guilty pleas
  • 4 sentencing
  • 1 lethal injection administered*

The IRS has also recently added new content to their website dedicated to curbing identity theft. The reason for all this focus on identity theft is to stop and prevent new cases of refund fraud ahead of the tax filing season.

This unprecedented effort against identity theft sends a strong, unmistakable message to anyone considering participating in a refund fraud scheme this tax season. We are aggressively pursuing cases across the nation with the Justice Department, and people will be going to jail. This is part of a much wider effort underway at the IRS to help protect taxpayers.

~ IRS Commissioner Doug Shulman

I don’t know about you but I wouldn’t want to be one of Shulman’s statistics.  The Commish isn’t fooling around.

Cardinals Rally Squirrel Gets Card

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In the bottom of the fifth inning of a Cardinals’ victory against the Philadelphia Phillies in Game 4 of the NL Division Series, a squirrel darted across the Busch Stadium field just as Phillies pitcher Roy Oswalt delivered a pitch to Schumaker.

The squirrel, which became a rallying rodent for Cardinals players and fans during St. Louis’ remarkable run to a World Series title, appears on a Topps 2012 card along with Schumaker’s foot.

According to Beckett Baseball, which covers the collecting business, the card is “one of a few surprise short-printed variation cards to be found in the product, so it’s not really a Rookie Card—but it should be one that commands attention from collectors.” Full story here.

You may think all of this is a bit nutty, but the first eBay auction to end showed the card commanding $319.95 via a Buy it Now. The first auctioned copy of the card is set to end on Tuesday afternoon and stands at a mere $611.99 after 25 bids. See ESPN story.

The Dreaded IRS Audit

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If there were a way to guarantee avoidance of an Internal Revenue Service (IRS) audit, there isn’t a person in the country that wouldn’t want to get his hands on that secret sauce.  But there isn’t.  You never know if your return is going to be one of the approximately 1.11% of returns that are selected for audit each year.  However, there are several factors that are known to increase your chance of audit:

  1. High income (particularly income exceeding $200,000)
  2. Large charitable donations
  3. Claiming the home office deduction
  4. Claiming rental losses
  5. Deducting business meals, travel, and entertainment
  6. Claiming 100% business use of vehicle
  7. Running a cash business
  8. Engaging in currency transactions
  9. Taking higher-than-average deductions

Of course if you try to pull shenanigans on your tax return then you open yourself up to greater scrutiny too.  For instance, don’t try any of the following:

  1. Failing to report all taxable income
  2. Writing off hobby losses
  3. Failing to report a foreign bank account

An audit can be a simple, single-issue question, or it can be a complicated, tedious process that results in an assessment of additional taxes.  If the assessment causes a tax debt that cannot be paid, a tax relief attorney may need to be retained.

Obama Staffers are Human: They Owe $834k in Back Taxes

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The IRS released data showing the tax debt statistics of federal employees, and it has created just a little buzz. I realize that most of the stories circulating around the web these past few days carry the more impressive headline of “3.4 billion owed,” but that includes ALL federal employees, even retirees. There are a lot of federal employees around the nation. I think it is more impressive to focus on those closer to the president.

36 of the approximate 1,800 Obama staffers owe a combined $834,000, which equates to roughly 2% of all executive office employees. Of course this wouldn’t be nearly as big a deal if President Obama had not been focusing so much on tax equality and the need to fix the tax code so that everybody is required to pay their fair share. Many news sources are seeing this as an opportunity to find flaws with Obama and his administration.

However, for me, more than anything, this story is a reminder of how pervasive tax problems are in this country. Literally anyone can find themselves in a situation where they cannot afford to pay what they owe when they owe it. It is not uncommon for ordinary folks to incur a little tax debt at some point in their lives, and factors like race, gender, economic status, and education do not accurately predict who will owe. If an employee of the US Senate can owe back taxes (and according to the report, 217 of them do), then you could owe too.

Ai Weiwei’s Story Told in New Documentary Film

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Filmmaker, Alison Klayman, has documented the life and work of Ai Weiwei in a film that premiered at Sundance this past weekend. Ai is known on this blog for his tax problems (“problems” that were likely invented by the Chinese government as a way to appear to incarcerate him for legitimate reasons), but is recognized around the world as one of China’s most outspoken dissidents.

“Ai Weiwei: Never Sorry” tells the story of Ai through exclusive interviews of the artist himself and those that are close to him. See a high quality preview of the film here: ai-weiwei-evolution-of-a-dissident.html.

“Individual freedom . . . independent thinking and expression . . . those are the core values of my activities.

~ Ai Weiwei

Ai often uses his art to make strong political statements. This is a man who knows he could be snatched up at any moment by Chinese authorities for his provocative art and opinions. He knows that his life (or death) is in the hands of the government he criticizes. His courage and ambition are inspiring.