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

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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.

IRS Tax Relief Issued in Oklahoma Tornado Zone

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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.

Fighting the IRS Alone? You May Have a Fool For a Client

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Nancy Cicero had a fool for a client in her fight with the Internal Revenue Service (IRS); she represented herself. Rather than seeking the advice of a tax attorney with the tools and experience needed to successfully fight the IRS; she went it alone, saved a few bucks, and is now a felon awaiting sentencing.

Cicero was found guilty on four counts for illegally claiming more than $3 million in tax refunds on her tax returns for tax years 2005 – 2008. Each count of filing false claims with the IRS carries a maximum penalty of five years in prison and/or fines up to $250,000.

According to the St. Louis Post-Dispatch, while self-represented, Cicero made no real opening statement or closing argument, and asked no questions of witnesses. When the judge would ask her if she wanted to object to the admission of evidence against her, she provided indecisive answers, such as, “I object. It is not my wish. Let the record show it is my wish.”

She should have wished for sound legal advice from her tax attorney. While saving a buck by representing yourself in a fight with the government is a legal right, common sense and Cicero’s predicament is proof positive that not all rights should be exercised. If you find yourself having to fight the IRS, don’t fight them alone, the tax attorneys at Montgomery & Wetenkamp are available to take your call and offer a free consultation.

You’re not paranoid if you think you’re being targeted by the IRS for tax purposes.

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According to CBS and Reuters, the Treasury Inspector General for Tax Administration (TIGTA) is expected to publish an investigative report this week detailing that Internal Revenue Service (IRS) agents specifically targeted conservative groups for review and consideration of their tax exempt status.

According to Reuters, director of exempt organizations for the IRS, Lois Lerner apologized Friday for what she called the “inappropriate” targeting of conservative groups for closer scrutiny, something the agency had long denied. She said the screening practice was confined to an IRS office in Cincinnati; that it was “absolutely not” influenced by the Obama administration; and that none of the targeted groups were denied tax-free status.

The TIGTA findings detail that the names and purposes of groups were used to scrutinize applications. Name scrutiny included organizations such as Tea Party, Patriot, and 9/12. Scrutiny was also being improperly given to references to government spending, government debt, taxes, education of the public via advocacy/lobbying to make America a better place to live; and statements that criticize how the country is being run.

IRS employees are presently prohibited from targeting anyone for their political or religious beliefs. However, under current law such conduct would only be grounds for termination. Wasting no time to ride the coattails of a juicy scandal, Congressman Mike Turner of Ohio already unveiled a bill to make such actions a felony. Considering that nobody seems to know anything in these types of cases, and that the portions of the report available so far appears to be no different, it will be interesting if anyone is ever prosecuted criminally if the bill were to pass.

Is Your Online Imprint Going to Trigger an IRS Audit?

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In mid-April I noticed a rather innocuous news release on the IRS website in regards to some type of email policy. If it wasn’t so cryptic and fraught with legal positioning, I would probably have considered it with the same drab spun by the IRS press cycle on a daily basis. However, the statement was so obtuse, it required at least a Google search or two to decipher the precipitous for the need to publically proclaim their position on email surveillance.

Here’s the IRS statement from April 18, 2013:

“Where the IRS already has an active criminal investigation and seeks to obtain the content of emails from an Internet Service Provider, we obtain a court ordered search warrant. It is not the IRS policy to seek the content of emails from ISPs in civil cases. Respecting taxpayer rights and taxpayer privacy are cornerstone principles for the IRS. Our job is to administer the nation’s tax laws, and we do so in a way that follows the law and treats taxpayers with respect. However, to resolve any remaining confusion surrounding this issue, the IRS is reviewing its policy and guidance and will make appropriate updates.”

I don’t have a crystal ball or a microphone in the IRS headquarters, but I believe the precipitous for the statement was damage control based on numerous news stories circulating recently that the IRS was beginning to use more than the standard tax disclosures to catch you in a tax lie. It was reported that the IRS was acquiring personal information on taxpayers’ online activities, from eBay auctions, Facebook posts, credit card transaction records, and e-payment transaction records, to verify the information reported (or not reported) on your tax return.

It was reported that the new online surveillance policy was precipitated because the IRS is under heavy pressure to help the federal government out of its budget crisis by chasing down revenue lost to evasions and errors each year. According to Edward Zelinsky, a professor at Benjamin N. Cardozo School of Law and Yale Law School. “I am sure people will be concerned about the use of personal information on databases in government, and those concerns are well-taken. It’s appropriate to watch it carefully. There should be safeguards.” He adds that taxpayers should know that whatever people do and say electronically can and will be used against them in IRS enforcement. Be warned.

It is alleged that the IRS is going a step beyond law enforcement agencies that use openly displayed social media information such as twitter, facebook, and instagram to prove illegal activity by asserting there is no right to privacy in personal correspondence via email, facebook chats, twitters direct messages, and similar non-public online communications.

According to a blog post by Nathan Wessler on the ACLU’s blog, even though judges are holding that people’s emails are private communications (most notably in United States v. Warshak, a 2010 decision from the Sixth Circuit Court of Appeals), the IRS is going its own way on the matter, claiming that Americans have no privacy rights in any correspondence sent via the internet, so that the IRS has no obligation to get search warrants. It was the policy of the IRS to read people’s email without getting a warrant. Not only that, but the IRS believed that the Fourth Amendment did not apply to email at all. A 2009 “Search Warrant Handbook” from the IRS Criminal Tax Division’s Office of Chief Counsel baldly asserts that “the Fourth Amendment does not protect communications held in electronic storage, such as email messages stored on a server, because internet users do not have a reasonable expectation of privacy in such communications.” Again in 2010, a presentation by the IRS Office of Chief Counsel asserts that the “4th Amendment Does Not Protect Emails Stored on Server” and there is “No Privacy Expectation” in those emails.

I suppose the end result for me on this issue is the portion of the statement that reads: “It is not the IRS policy to seek the content of emails from ISPs in civil cases.” In my dealings with the IRS in non-criminal cases, policy has no president or consideration in a collection case. Therefore, you should consider your online footprint a fishbowl for IRS audit fodder.

Boston Marathon Tax Relief

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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.

IRS Records Prove AROD is a Bad Guy in Boston

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According to a recent Boston Globe review of Internal Revenue Service (IRS) filings New York Yankee Alex Rodriguez is a bad guy. A Boston news source depicting a Yankee as a bad guy is hardly surprising. What interests me, as a tax attorney, is that the basis for hatred for Rodriguez this time is not baseball related; it is based on IRS records. According to the Boston Globe, nonprofit organizations are generally expected to donate 65 to 75 percent of their revenues to their designated charitable causes. The remainder of their revenues are supposed to be used to pay their necessary expenses and reasonable salaries of nonprofit employees. This was not the case for Rodriguez’s non-profit organization, according to the Globe.

In 2006, Rodriguez hosted a charity poker tournament that helped the A-Rod Family Foundation raise $403,862 for charity. How nice! However, according to IRS reports, barely 1 percent of the money raised were actually paid to charity. Specifically, only $5,000 was paid to Jay-Z’s Shawn Carter Scholarship Fund and only $90 was paid to a Little League baseball team in Miami; how charitable. The not for profit organization subsequently stopped submitting financial reports to the IRS, and was then stripped of its tax-exempt status. Again, AROD is a bad guy … no shocker … just surprised the revelation was tax based.

Tax Day is Around the Corner; Are You Prepared?

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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.

Hello Old Friend … Baseball is Here Again!

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It’s finally here, and the San Francisco Giants are ready to defend their World Series title and the Tax Attorneys at Montgomery & Wetenkamp are ready to root them on. If you remember last year’s opening day, it was confusing; read about last year’s confusion here. This year, however, it’s simple; the season started with a national game on Sunday night (even if it was just the Battle of Texas more suited for a football matchup), and everyone else gets started today.

The only thing that irks me about this year’s opening day is the World Series Champion San Francisco Giants are again not getting to open the season at home against the Dodgers as World Champs. Even in 2011, the then defending World Champion Giants didn’t open at home, they opened in Los Angeles as they do today. Don’t get me wrong, it’s the best rivalry in sports, just we deserve an opening day at home, especially as the World Champs. Raising the banner and getting the rings in front of the Dodgers and their “fans” would be awesome.

On the other hand, we get to raise the banner and get the rings in front of the Cardinals, as we did in 2011, which is almost as good as sticking it to the Dodgers. However, the Cardinals did take it from the Giants in 2011 thanks to Scott Cousins. I guess I need to remember that baseball’s Opening Day is just one game… and since we open the season in Los Angeles, we get the bad guys at home to end the season; when the games really count. Play Ball and enjoy the story of the season…

 

Just Over One Month to Go In Tax Season and You Can Finally File Your Tax Return

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Over the weekend, the Internal Revenue Service (IRS) finally completed reprogramming and testing its systems for tax-year 2012. This includes the lingering updates mandated by the American Taxpayer Relief Act (ATRA) enacted by Congress back in January. This final update finally allows all taxpayers to prepare their tax returns. The final updates apply to taxpayers claiming residential energy credits on IRS Form 5695 and taxpayers claiming various business tax credits and deductions on their federal tax returns.

The IRS began accepting tax year 2012 returns in phases as it worked over the past several months to update various forms and make adjustments to processing systems to apply the current tax laws. Finally, with just six weeks to go before this year’s April 15, 2013 deadline, all IRS tax returns can now be filed. And, if you quickly find out that you’re in tax trouble, now that you can actually file your tax return, the tax relief attorneys at Montgomery & Wetenkamp will be able to resolve your IRS tax debt problems, call us toll free at (800) 454-7043.