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Information for the 525,000 Secret Federal Workers that are Hiding in Plain Sight – IRS Notice LT36

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According to a recent batch of IRS Notice LT36, issued as recently as June 2025, there are approximately 525,000 federal employees, current or retired, who are noncompliant with respect to their federal tax obligations. Are you one of them?

Federal employees sometimes have a difficult burden; they are both representatives of the federal government and also taxpayers subject to tax laws. There is a special Internal Revenue Service (IRS) unit assigned to collect liabilities and resolve IRS collection cases involving Federal Employees; These can be your local postal worker, the person at the Social Security Administration office, or your family member who is honoring our country with military service, for example.

In typical government fashion, it does usually take a little bit of time for the IRS to identify and call out its own. But when it does happen, the IRS will notify the federal employee by issuing Notice LT36.

Notice LT36 is based on the Federal Employee/Retiree Delinquency Initiative (FERDI) program that was developed in 1993 by the IRS to promote federal tax compliance among current and retired federal employees. The program incorporates the purpose and intent of Office of Government Ethics regulation 5 C.F.R. 2635.809 which addresses the responsibility of federal employees to “satisfy in good faith their obligations as citizens, including all just financial obligations, especially those such as federal, state, or local taxes that are imposed by law.”

The most common recipients of Notice LT36 are taxpayers currently receiving a salary or pension from the federal government. This includes the following:

    • Civilian employees, including U.S. Postal Service
    • Civil service or Federal Employee Retirement System (FERS) retirees
    • Active-duty military
    • Military retirees
    • National Guard/Reservists

It is common that federal employees with this pedigree and background are usually caught in a surprised situation of their tax liability. That is the purpose of IRS Notice LT36: to provide our federal employees and service members the opportunity to address their IRS tax problem. Once the notice is issued, the federal employee should take proactive steps to remedy their IRS tax liability.

Contribution By Farah Oweimer; Email: Farahoweimer@gmail.com

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Internal Revenue Service Notice CP49 – What Happened to My Tax Refund?

So, you prepared your tax return, you were a good taxpayer, gave the government an interest free loan, overpaid your taxes, and were due a refund, right? Wrong, if you received Internal Revenue Service (IRS) Notice CP49.

The IRS provides notice CP49 to a taxpayer when the often-needed tax refund that you are waiting on is applied to a tax debt owed to the IRS, regardless of whether you dispute that you owe the IRS. Sometimes the debt owed is known to a taxpayer, sometimes it comes as an unwelcome surprise.

The tax refund as noticed by IRS Notice CP49 and snatched by the IRS includes an assessed tax owed plus penalties and interest on a balance due. The idea behind why you would receive a notice from the IRS Notice CP49 is the total refund you were to receive from being a compliant taxpayer and filing your tax return unfortunately gets applied to the account to relieve your tax debt instead of paying your bills.

IRS Publication 594 explains the steps the IRS will take to collect the on an IRS tax debt owed. The first step is if you owe taxes, the IRS will send you a first attempted bill. The second step, if you do not pay your first attempted bill, they will notify you with a second attempted notice. Lastly, if you do not pay your final bill the collection process begins with the notice of CP49 notifying your that your expected refund will be intercepted. If you don’t believe that you owe a tax liability, this would be the time to take immediate action to investigate the discrepancy between your records and the IRS’ assessments against you.

Having an expected refund intercepted by the IRS can be both shocking and devastating depending on your financial circumstance. If the tax debt is known to you, then the IRS Notice CP49 is not shocking, but something that needs to be addressed by either contesting the assessment or engaging in IRS collection defenses. If the tax debt is not known to you, then the alleged assessment needs to be investigated for accuracy, because the IRS is not perfect and they too make mistakes.

If you received IRS Notice CP49, you will not likely be receiving your expected refund. However, understanding why you owe and addressing the balances due is what the MW Attorney, A Professional Legal Corporation assists taxpayers with and they offer a free consultation.

Contribution By Farah Oweimer; Email: Farahoweimer@gmail.com

IRS News: General Guides, Tax Tips, and Filing Information

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• IRS tax guides offer comprehensive instructions for both personal and business taxes.

• Staying organized and keeping accurate records are key IRS tax tips to maximize deductions.

• Avoid common filing errors by double-checking income reporting and deduction calculations.

• Keep up with essential IRS tax filing information, including deadlines, updated forms, and tax credits.

• Consulting a tax professional can provide personalized IRS tax advice for self-employed individuals and complex situations.

Staying updated on IRS guidelines is essential for taxpayers, whether you’re an individual filer or a business owner. With tax laws changing regularly, understanding the basics can make tax season much smoother. This blog will cover essential IRS tax guides, tax tips, and up-to-date tax information to help you navigate the filing process with ease.

Understanding the Basics – An Overview of IRS Tax Guides

An IRS tax guide is a valuable resource designed to help taxpayers understand their obligations. These guides come in the form of IRS publications, covering various topics like deductions, credits, and tax law changes. For both personal and business taxes, IRS guides provide detailed instructions and examples to ensure proper filing.

Navigating these guides can be simple if you know what to look for. Start by identifying the specific publication relevant to your situation—whether it’s about home office deductions or self-employment taxes.

Top IRS Tax Tips for Individuals and Businesses

When it comes to maximizing your deductions, a few practical IRS tax tips can go a long way. First, keep detailed records of all expenses that may qualify for deductions. Additionally, avoid common filing errors, such as misreporting income or incorrectly calculating deductions. These mistakes are easily preventable with a little extra attention.

Essential IRS Tax Information for the Upcoming Year

It’s crucial to stay informed about new IRS tax filing information each year. Key changes often include new deadlines, updated forms, and adjustments to tax credits. Make sure you’re aware of refund timelines and any credits you may qualify for.

Expert IRS Tax Advice for a Stress-Free Filing Season

Knowing when to seek IRS tax advice is key to a smooth filing season. For self-employed individuals and freelancers, seeking specialized advice can help navigate complex tax obligations.

Final Tax Insights

Navigating tax season can feel daunting, but staying proactive and informed will help you file with confidence. Use the resources provided by the IRS to stay on top of deadlines and avoid common errors. For more complex situations, especially if you’re self-employed or managing a business, consulting a tax professional can provide tailored guidance, ensuring you’re fully prepared for whatever tax season brings.

2018-2019 US Government Shutdown

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US Government Shutdown & the IRS – 2018 into 2019

We are now in week three of the government shutdown.

During a federal government shutdown, many agencies close their doors and workers are furloughed, meaning that they are off work and without pay. Government employees who perform “essential services” (military, law enforcement, etc.) continue to work, but without pay until the budget is passed. The last major government shutdown occurred in 2013 during the Obama administration when lawmakers could not agree on the terms of the Affordable Care Act. That one lasted 16 days and impacted the personal finances of thousands of government employees, not to mention the effect it had on the US economy.

Not surprisingly, the IRS does not fit into any category of emergency/essential services that would keep it open. There are pros and cons to the IRS closure, depending on your individual situation. If you owe back taxes and you’re working with a revenue officer, maybe you would like more time to arrange your affairs and this little break may be just what you need right after a busy holiday season. However, if you need to get into contact with the IRS for whatever reason, then this has certainly been a frustrating couple of weeks.

Don’t even bother calling the IRS right now. If you try one of the IRS 800 numbers, you’ll get a very generic message saying “all circuits are busy, please try your call again later.” If you call a local office (I called Fresno, CA for example) you’ll get a slightly more informative greeting: “live telephone assistance is not available at this time.”  And if you have a revenue officer’s direct line, you may get something like “I will be out of the office for the duration of the government shutdown,” and then a referral to the US Treasury website for more details on the shutdown. I suspect that the IRS may have their fax services turned off as well because a couple numbers that I use frequently are not currently working. The IRS does not typically use outside email to communicate with taxpayers or their representatives. The IRS website appears to be working normally; in other words, they’re still accepting payments.

I anticipate that the government shutdown is going to have some lasting effects on IRS operations and workflow. Once IRS employees go back to work, they will be faced with weeks of backlog that has been piling up. I think we can expect things to just move more slowly for a month or two while they catch up after their return.

If you have any further questions or concerns, please don’t hesitate to get into contact with us.

IRS Holiday Fraud Warnings

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For years now, the IRS has taken an active role in warning taxpayers, and the tax industry in general, of tax-related scams, but they seem to be as prevalent as ever. Once a year, right around tax season, the IRS increases the number and intensity of its warnings to try to match the number and intensity of scams. Criminals have found that tax season (January thru April) is the best time to practice their craft. But we have seen the Christmas season begin earlier and earlier each year in the world of retail sales — before Thanksgiving in most places, and the tax fraud people seem to be following suit. They don’t wait for tax season anymore, which often puts the beginning of “tax fraud season” smack dab in the middle of the holidays. Their schemes are almost always based on some type of IRS impersonation, sometimes targeting particular groups in an attempt to exploit their vulnerabilities. The IRS recently provided a list of several variations, including the following:

  1. Direct calls requesting immediate payment: This is perhaps the boldest and most common technique. Taxpayer will receive an automated message or a threatening cold call demanding payment over the phone. Often the caller will threaten prosecution or jail time based on some false claim of tax evasion.
  2. The Federal Student Tax scam: This scam is carried out in manner similar to the direct call, but targeted at students and parents of students. As you might know, there is no such thing as a federal student tax.
  3. Fake tax bill for Affordable Care Act liability: It is true that a taxpayer could owe penalties (aka, “shared responsibility payments”) and advanced premium tax credit overpayments under the Affordable Care Act. It is also true that the IRS is charged with the responsibility of collecting such payments. However, you must be careful that the letter or email is legitimate. An email claiming to be from the IRS is most likely a fake. And the IRS says that taxpayers should be skeptical of “CP2000” letters requesting that payment be send to the “Austin Processing Center.”
  4. Emails from the boss: Sometimes tax scammers have been known to contact human resources and others within a company asking for confidential employee records, including social security numbers.
  5. Gaining access through the tax preparation industry: Tax preparers should be aware of a scheme whereby the criminals contact them with fake software updates via an email that appears to be from a tax software firm. Somebody in the tax industry might be savvy enough to recognize this kind of thing as a fake, but since many taxpayers use tax filing software themselves, sometimes these emails go straight to the consumer who could more easily fall victim to this scheme.

It may be that the holidays are the perfect time for a variety of criminal schemes. I was recently made aware of a scheme targeting attorneys. An email with the subject line “The Office of The State Attorney Complaint,” if opened, could expose an unwary lawyer to a computer virus.  If this sounds like an agency with a clumsy name, it’s because no such agency exists. Stay vigilant my friends; apparently there are a lot of Scrooges out there this time of year.

Contact us today for more information or a free consultation!

IRS: Some Refunds Will be Delayed in 2017

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It’s hard to make tax news interesting because it’s always the same story over and over again. People are getting scammed by criminals who impersonate the IRS, politicians want to replace the IRS Commissioner, the IRS hasn’t been funded properly and doesn’t have the resources to do their job, the IRS filed a federal tax lien against a celebrity who owes millions of dollars in back taxes, and the IRS warns taxpayers to brace themselves for a rocky tax season. Even the “scholarly” articles are completely predictable: How do we close the Tax Gap?, Who’s going to overhaul and simplify the tax code?, What can be done to make the IRS run more efficiently?, How do we promote voluntary compliance?  The details change a bit, but it’s basically an endless cycle of the same old unsolved problems.

Today the IRS announced that refunds will be delayed for certain early filers during the 2017 tax season. New laws require the IRS to hold entire refunds where the filer claims the EITC or the ACTC until at least February 15th. Taxpayers who expect a refund naturally tend to file in January or as early as they can, and many are accustomed to getting their refund somewhere near the end of January or early in February. Believe me, it is common for people to plan vacations and major purchases around their tax refund. Having to wait a week or two longer may not seem like a big deal, but some people have come to really rely on that check, and a couple weeks can feel like a couple months.

At least this time the reason for the delay is more valid than “we don’t have the resources to process the refunds quickly.” The IRS is reviewing certain returns with heightened scrutiny in an effort to identify and prevent refund fraud and identity theft.

The IRS Commissioner, John Koskinen, said, in explaining the need for today’s announcement, “We don’t want anyone caught by surprise if they get their refund a few weeks later than in previous years.” My question is, what, besides this press release, will the IRS do to get the word out? They’ll tweet it out a couple times, I have no doubt about that. But this kind of info needs to spread to all the news outlets, social media, tax preparers, and tax prep software so that even the least connected of America’s taxpayers will be aware.

Contact us today for more information or a free consultation!

New IA Fee Schedule Proposed

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The IRS is proposing a completely restructured fee schedule for installment agreements, which would take effect on January 1, 2017. This was announced via IRS newswire under the title: “IRS Proposes Revised Fees for Installment Agreements; New Lower Fee Available for Direct Debit Online Payment Agreements; Special Relief Provided to Low-Income Taxpayers.” Of course the title only tells half the story. It appears to have been intentionally spun to highlight only the favorable aspects of the fee schedule. If so, it was completely unnecessary; the only people who read these articles are savvy tax professionals who will probably read beyond the title and not the general taxpaying public who the IRS intended to trick. And if the title is intentionally misleading, it tells you a thing or two about the IRS’ low opinion of taxpayers.

Moving beyond the demeaning title, we can see that the fee for a Direct Debit Installment Agreement (DDIA), if done online, would be reduced ($31), the low-income taxpayer fee would remain the same ($43), and every other applicable IA fee would actually increase. The IRS is clearly trying to phase out the regular old installment agreement that is established by phone or mail and that is paid by sending in a check every month. Under the new fee schedule, the cost for that kind of agreement would be nearly twice as high as it is currently (from $120 to $225).

One of the big complaints we get from taxpayers is that they feel the IRS is constantly trying to “nickel and dime” them until they find themselves buried in a mountain of debt that they will never be able to repay. One of the ways the IRS does this is with interest and penalties. Of course if your tax debt is a big one, then we’re talking a difference of hundreds and thousands of dollars, not just nickels and dimes. Another way that taxpayers feel the vice tightening is when they get audited for tax periods they thought were already settled. It can be very disconcerting not knowing exactly what you owe and not knowing if that number could change. The new fee schedule proposal has that same feel for me, but I predict that very few taxpayers will ever notice they are being “nickel & dimed” this time. The reason I say that is most people do not set up plans for IRS tax relief payment schedule on a regular basis or with enough frequency to notice a change in fees. Yet another reason why the misleading title was unnecessary.

Contact us today for more information or a free consultation!

IRS Tech Issues

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I have a memory from my first job as a lawyer that reminds me how slow the legal profession can be embracing new technology. Or maybe it just reminds me of how old I am.

It was 2003 and we were using these lined, carbon copy half-sheets we called “quick notes” to send informal hand-written messages to opposing attorneys, doctors, etc. I don’t remember sending them to clients because they didn’t really make the best impression, so we would dictate actual printed letters on official letterhead when writing to clients. We mailed the top white sheet to the recipient and saved the yellow carbon copy for the file. This form of communication seemed a little dated to me, even then, but it worked, and it was efficient. Even though it had been in the mainstream for about 10 years, I do not remember using email at that job.

Some people, or groups of people, just don’t latch onto technology very quickly. Because the taxpaying public includes every category of person imaginable, it is easy to see how a large percentage of taxpayers would have a hard time with the IRS’ suite of web-based services. The National Taxpayer Advocate, Nina Olson, is concerned about those who may get left behind as the IRS moves more and more of its services online. These are some of the concerns outlined in her annual report to Congress that was published a few days ago.

Somewhat of a contradiction has been developing over the years as the IRS formulates its “future plan” that heavily emphasizes technology and, specifically, online taxpayer accounts. Online tools are supposed to make things easier and more accessible for taxpayers (in fact, that is always their stated purpose), but it is obvious that the main purpose is to save the IRS money. Can you have both? Sure you can, but the key is that you don’t completely phase out the low-tech alternatives so that there are still options for the “quick note” users. For example, the IRS plans to phase out face-to-face taxpayer assistance. First they changed the name of walk-in sites to “Taxpayer Assistance Centers.” Then they plan to eliminate walk-ins and require appointments. Is it only a matter of time before these assistance centers are completely off limits to the public? It’s true, the IRS has a tricky balancing act when it comes to implementing new technology, and frugal administration of the tax system is certainly a worthy goal. But forcing everyone to embrace online accounts and tools will only cause more frustration, distrust, and inefficiency — things the IRS has been trying to avoid for decades.

IRS Warns of Spoof Emails from CEO Posers

IRS Warns of Spoof Emails from CEO Posers

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As an employee, when the CEO or other executive asks you to jump, the typical response is “how high?” So if you were to get an email from the CEO asking for a list of employee data, you probably wouldn’t question it. You’d probably send the info as soon as possible and without too much thought.

Cybercriminals who understand the position of power that company executives possess are using these relationships to obtain sensitive employee data. The practice is called “spoofing” because the thieves pose as the CEO or other high level executive, using the real executive’s name in an email to those within the company who have access to W-2s and social security numbers (typically those within payroll or human resource departments). Then these criminals obviously use the data to file false refund returns or sell the data to 3rd parties.

The IRS made a statement yesterday alerting the public of this new kind of phishing scheme:

If your CEO appears to be emailing you for a list of company employees, check it out before you respond. Everyone has a responsibility to remain diligent about confirming the identity of people requesting personal information about employees.

~ IRS Commissioner, John Koskinen

I guess the question some payroll people will have is “what should I do to check it out“? Every company and every office is different. Your response may depend on the formality of your office and the relationship you have with the executive who requested the info. In some circumstances it may not be appropriate to knock on the CEO’s door asking if he/she emailed you. It might be a little awkward emailing back asking the CEO what he plans on doing with the info, or asking if he can authenticate by giving you the name of his favorite childhood pet or his mother’s maiden name.

I suspect that in most cases the email address of the sender will be a dead giveaway. If you don’t recognize the email address, then you can ask the follow up questions or pay the CEO a visit. Having said that, I don’t know for sure that these cybercriminals cannot send emails that appear to be sent from a company email system, in which case it might be wise to ask about the childhood pet anyways. Better safe than sorry, even if the price is a little embarrassment.

The Human Element

The Human Element

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Sometimes I complain (mostly to myself, and sometimes to other people who don’t care) that the IRS customer service employees are like robots. They tend to go by the book even when there presents itself a more common sense and just solution. There is very little emotion or sensitivity for the struggling taxpayer who is burdened by a bank levy or wage garnishment. However, sometimes I am reminded that the flip side can be just as bad: the human response can at times be ugly too. The employees who make up the IRS are actually human beings with all the same passions and foibles as regular folks, and there’s no better reminder than when we hear of IRS agents accepting bribes.

After IRS Agent, Paul Hurley, allegedly saved a medical marijuana dispensary owner a million dollars in an audit, he suggested that, in exchange for the good deed, the owner give him $20,000. As if he thought he was being wire tapped, or as if it is somehow less obviously bribery when no words are used, the IRS agent rubbed his thumb over the top of his index and middle finger in the universal sign for “cash money.” He should have gone with his gut on this one because later, when payment day arrived, the FBI would be watching the whole thing. These kinds of deals almost always end badly for the IRS employee because as much as the IRS doesn’t trust taxpayers with delinquent tax accounts (especially when tied to a medical pot store), taxpayers trust IRS agents even less. As you can imagine, our guy in this story didn’t take long to decide before he was on the phone with the authorities tipping them off. Hurley’s trial begins this week.

The puzzling thing about this story is that Hurley demonstrates a significant amount of remorse in his resignation letter but his attorneys state that he denies soliciting a bribe. In fact, his attorneys say that Hurley was actually being offered a job to assist with the company’s books and the $20k was just up-front payment for this little side job! Even though I am one, I find it incredible what attorneys will say sometimes.