Tag Archives: IRS

Filing Date Change for Annual Employee and Information Returns

Some IRS filing dates have changed for the 2016 year; annual employee and information returns must be filed sooner than ever. The Consolidated Appropriations Act of 2016 calls for changes to help combat tax fraud, including the new accelerated due dates for employer copies of forms W-2 and 1099-MISC. The previous filing deadline of February 28, for forms W-2 to the Social Security Administration and 1099-MISC to the Internal Revenue Service, has changed to January 31, of the following year.

In addition to being the 2016 employer filing deadline, Tuesday, January 31, 2017, is also when these forms must be distributed to employees.

IRS-imposed penalties can be substantial. If you miss the filing deadline, it could result in late fees ranging from $50 to $260 per filed form. Furthermore, keep in mind that if you have 250 or more forms to submit, the forms must be filed electronically. An IRS penalty will be imposed on companies who violate the electronic filing rule by submitting paper forms.

If you have questions regarding the new filing deadlines or would like to discuss your particular situation, please call your Aronson tax advisor at 301.231.6200.

Mandatory ITIN Renewal

Important changes coming in October – If you are a taxpayer with an Individual Taxpayer Identification Number (ITIN), there is an important change that takes effect October 1, 2016. ITINs must be renewed if one of the following two criteria applies:

  • The ITIN has not been used on any tax filing for 2013, 2014, or 2015.
  • Issuance prior to 2013, with middle digits 78 or 79 (9xx-78-xxxx and 9xx-79-xxxx).

You can only renew your ITIN by submitting form W-7 to the IRS by mail or at a walk-in IRS office. The link provided here is to the most recent form, which is the only version that may be used for ITIN renewal. While the renewal process can take up to 60 days, failing to renew your ITIN prior to a tax return filing will result in refund delays and loss of various tax credits, until it’s reestablished.

Don’t wait for a renewal notice in the mail from the IRS to affected taxpayers, we recommend that those with ITINs be proactive and renew if necessary, to be prepared for this upcoming filing season.

For more information, please contact Aronson Partner, Larry Rubin, CPA, at lrubin@aronsonllc.com or 301.231.6200.

IRS Impersonator Sent to Jail

This past filing season, taxpayers across the country discovered that their electronically submitted returns were rejected because someone had already fraudulently filed a return under his or her Social Security number. The IRS has attempted to address this by issuing affected taxpayers a PIN to use on the following year’s tax return. However, even that database was hacked, rendering many of these PIN’s ineffective.

An ID theft bust in April resulted with a Georgia couple pleading guilty to conspiracy and money laundering. They used the IRS’s online “get transcript” feature to steal taxpayer refunds. The IRS has since shut down the “get transcript” link after it found that a widespread breach had occurred.

The federal government is losing billions of dollars to ID theft. While efforts are continually being made to stop the abuse, criminals are routinely one step ahead of the government.

In our experience, the ID theft has been confined to the fraudulent return activity. But the victim should still take precautions to avoid potentially devastating problems resulting from much more pervasive activity. Consider the following proactive measures:

  • Placing a freeze on your credit – this prevents any credit agency you don’t already do business with from checking your credit. This makes it very difficult for an identity thief to open new accounts in your name.
  • Review bank and credit card transactions – don’t rely on the financial institution to catch strange charges. ID thieves know that most people do not pay attention to their bank and credit card reports. Watch what is being charged, and contact the bank or credit card company to report any suspicious activity.
  • Don’t toss mail; shred it – there is no greater treasure trove than your recycling bin. Anything with personally identifiable information should be destroyed.
  • Password protection – secure all accounts with a robust password and change it every few months. Yes this is a pain to do, but not nearly as painful as dealing with ID theft.
  • Careful with e-mail – sending documents with Social Security numbers and other sensitive information thru e-mail in unprotected files is dangerous. A lot can happen along the electronic highway from the sending computer to the receiving computer.

For further information or to discuss your specific situation, please contact Larry Rubin, CPA, Aronson’s Tax Controversy Practice lead at 301-222-8212.

When is a Tax Return not a Tax Return?

In bankruptcy cases that involve discharge of tax liabilities, one of the criteria for consideration is a filed tax return. Various appeals courts have held that a late return is not a return for discharge purposes unless it is filed pursuant to IRC 6020(a). This section provides that if a taxpayer fails to file a return but gives the IRS all information necessary for it to prepare one; the IRS-prepared return signed by the taxpayer will constitute a valid return.

In the case In Re: Johnson, the U.S. Bankruptcy Court indicated that it would be following the above holding with respect to late returns. The rationale behind this stance is with the fourth element of the Beard test. In order for a filing to qualify as a valid return, it must meet all four elements:

  • The filing must purport to be a return
  • The filing must be executed under penalty of perjury
  • The filing must contain sufficient information to allow the IRS to calculate the tax
  • The filing must represent an honest and reasonable attempt to comply with the tax law

A properly prepared late return done using the prescribed IRS forms would meet the first three elements. But filing a return late, especially filing one in response to an IRS notice, on its surface does not constitute an honest and reasonable attempt to comply with the tax law, thus failing the fourth element. It is this aspect that the Court had difficulty with in its determination of whether a late filed return is considered a valid return for bankruptcy purposes.

Absent compelling reasons as to why a return is being filed late (such as health or some other issue beyond the taxpayer’s control which prevented the taxpayer from filing on time), it may be a better course of action to have the IRS involved in the preparation of a late return, if there is a contemplation of pulling the tax due into a future bankruptcy proceeding. In such circumstances, consulting with a qualified attorney and knowledgeable tax advisor prior to taking any action would be the wise path to take.

To discuss your particular situation, or for any other matters, please contact Aronson’s Tax Controversy Lead Partner Laurence C. Rubin, CPA at 301-222-8212.

IRS Phone Scams, Do You Know Who Is Calling?

regulators

Do you know who’s calling? Don’t become a victim of an IRS phone scam – In a recent news release, IR-2016-14, published by the Internal Revenue Service (IRS) on February 2, 2016, the IRS continues to warn  of phone scams that remain a serious threat to taxpayers.

Based on January reports, the Treasury Inspector General for Tax Administration (TIGTA) announced there were around 896,000 contacts since October 2013, and 5,000 victims who have lost over $26.5 million as a result of the scam.

The IRS reminds taxpayers to be cautious of phone scams by criminals impersonating IRS agents especially during the upcoming tax filing season.

The IRS advises taxpayers of the following tactics often used by criminals, which the IRS will NEVER use. Tactics include:

  • Calls demanding immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.
  • Demanding that you pay taxes without giving you the opportunity to question or appeal the amount apparently owed.
  • Requiring a specific payment method for tax payments, such as a prepaid debit card.
  • Requesting credit or debit card information over the phone.
  • Threatening to bring in local police or other law-enforcement groups if payment is not sent.

Additionally, the IRS recommends the following:

  • If you don’t owe taxes, or have no reason to think that you do:
    • Do not give out any information. Hang up immediately.
    • Contact TIGTA to report the call. Use their IRS Impersonation Scam Reporting web page. You can also call 800-366-4484.
    • Report it to the Federal Trade Commission (FTC). Use the FTC Complaint Assistant  on FTC.gov. Please add “IRS Telephone Scam” in the notes.
  • If you know you owe, or think you may owe tax:
    • Call the IRS at 800-829-1040. IRS workers can assist you.

For more information and individual questions, feel free to call the Aronson Tax Team at 301-231-6200.

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