50% of IRS Calls Won't Get Through in 2015 Filing Season - Commissioner

 

Average wait time for IRS in 2015 filing season estimated at 35 minutes

It is very likely that many taxpayers will have questions about how to file their taxes this coming year. Many of these questions will likely revolve around the new forms required for the Obomacare law or ACA. We touched on the complexity of these new forms here. But the commissioner of the IRS, John Koskinen, is warning that 50% of those trying to get answers during the 2015 filing season may not get through at all. This compares to about 26% who couldn't get through in 2014. He also projects AVERAGE wait times of 35 minutes. Customer service has never been at the top of the IRS mandate, but we seem headed to all time lows.

Cynics might suggest that Commissioner Koskinen could be using scare tactics to pressure Congress to give him more money. You see, the House of Representatives is in a cutting mood, and there's no agency that they'd like to cut more than the IRS. There is little chance that the IRS will see any increase in funds in time for this expected catastrophe. So what is a poor taxpayer to do?

1. File really early. Refunds are also likely to be delayed. So the early bird is definitely going to get the worm this year. Get your form as soon as possible and get it turned in quickly.
2. If you have questions about the ACA forms, there will undoubtedly be many online articles and YouTube videos to help you through it.
3. This might be the year you will want to use a tax preparation firm. There are many fine companies out there doing this kind of work.  We might recommend you call:

Demetriou, Montano & Associates - Tax Resolution Specialists

12301 Wilshire Blvd. Suite 318
West Los Angeles, CA 90025
310-581-2900
888-987-1040
http://taxrepair.com

Another Cost You'll Pay for Obamacare - Tax Preperation Costs to Go UP, UP, UP!

Obamacare, aka the Affordable Care Act (ACA) has already proven to have been sold to the American electorate based on falsehoods, to be massively complex, and not to be affordable to either the middle class or those who have been granted subsidies.

 Now comes the 2015 tax-filing season, and a new set of costs on top of all the others.

Beginning with your 2014 tax returns, every taxpayer and tax preparer will need to become health insurance savvy as every taxpayer needs to be evaluated as to:

(a)  Are they required to have health insurance (the “individual mandate”)?

(b) If required to do so, did they have health insurance (either through an employer, through the exchange, or through an individual policy)?

(c)  Did the insurance meet the minimum requirements for coverage?

(d) Were all family members (typically includes children under 18) covered?

(e)  If purchased through an exchange/marketplace, were they entitled to a premium credit; did they receive a premium credit; and if so, how much?

You will need the answers to those questions if you are going to be able to fill in the below boxes on the revised form 1040!  Pay special attention to line 29, 38, and 45. 

 Line 29 – if the taxpayer purchased insurance through an exchange and received a subsidy (premium credit) that was GREATER than what they were entitled to, then the EXCESS (repayment) of the credit received over the allowable credit will be recorded here and added to their other taxes.

Line 38 – this is where we will have to record the PENALTY the taxpayer will pay if they were NOT exempt from having insurance, and (a) they had no coverage for part of or the entire tax year, or (b) had substandard coverage (a policy that did not meet the minimum requirements for coverage).

Line 45 – if they either received NO subsidy, or their subsidy (that was based upon their 2012 income via the exchange) was LESS than they were entitled to, then they would have a CREDIT here for the difference between their allowable subsidy and what they actually received.

Now in order to fill in those three blanks, you will almost certainly need to fill in proposed form 8962. The schedule will need to be filled out by every taxpayer who purchased insurance through an exchange, and (a) received a subsidy, or (b) is eligible for a premium tax credit! It would be fair to say that the individuals who are most likely to need this form or those least likely to understand how to fill it out.

That means the folks are going to need their tax preparer to fill it out. Assuming that tax preparers are still desiring to make a profit from helping taxpayers fill out their tax returns, the cost of filling out additional forms will result in higher costs to the taxpayer.

  

Remember that the marketplace formula for calculating the advance premium credit uses the 2012 income of the taxpayer in determining their credit.  If their income in 2014 was HIGHER than 2012, then most likely they received an excessive credit toward their premium – and it will be payback time on the 2014 return!

Here is the draft form 8962.  Remember – it is ONLY required if insurance was purchased through the marketplace – period! 

http://www.irs.gov/pub/irs-dft/f8962--dft.pdf

Any employer plan or individual plan has no credit applicability. 

HOWEVER, a penalty (individual mandate) MAY still be required if the employer’s insurance was sub-standard (not up to par with the least costly Obamacare plan) or coverage was not in place for the full year, or some family members were not covered (who had to be covered under the rules).

None of the above takes into consideration the rules for businesses, corporations, non-profits, and tax exempt organizations, and costs they must pay their tax preparers to insure compliance with the new rules and/or pay various fines for failure to comply.

If you are having difficulty with your 2014 tax return, and would like help understanding all the latest changes, the tax preparation division of Demetriou, Montano & Associates stands ready to help. Call 888-987-1040 and discuss your needs with us today.

Congress Takes Action to Stop Future IRS Tax-Exempt Scandals

Imagine that you have just started a small advocacy company for the purpose of helping save the whales. Unfortunately the IRS agent in charge of your case, who has the power to give you a tax exempt status, doesn’t agree with your cause. The agent has no legal right to turn you down, but does so anyway.

To make matters worse the agent somehow allows the names of your members, subscribers, or donors to get into the hands of an opposition group. This group then harasses your associates for being in league with you.

This is what happened in the run up to the 2012 presidential campaign, and now Congress may be about to do something about it.

The House of Representatives has passed H.R. 5418, prohibiting IRS officers and employees from using their personal email accounts to conduct official business. While it should seem obvious that a government agent with such power should keep a public paper trail regarding their deliberations, correspondence, and actions, this does not seem to be the case. 

The House also passed H.R. 5419, designed to provide tax-exempt groups with the right to an administrative appeal if they are turned down for tax-exempt status. It is remarkable that this appeal process was not already in place. The power to grant or turn down an application for tax exempt can be a dangerous tool in the hands of administrators who have inappropriate intentions.

 At the same time, the house passed H.R. 5420.  Some taxpayers have had their personal taxpayer information leaked to opposition groups for the purpose of chilling their first amendment rights. This bill would permit the release of certain information to these victims regarding the status of investigations into and such leaks of their personal taxpayer information.

All of these bills are in response to the ongoing investigation into inappropriate and illegal actions taken by various parties in the IRS determining tax-exempt status prior to the 2012 presidential campaign.

The bills now go on to the Senate.

Update: IRS Scammers Take Taxpayers for Billions

 

The darker the color, the more complaints

Phone call scams take innocents for hundreds of dollars each

The IRS is continuing to put out the alert as this phone scam is ripping off thousands of innocent taxpayers. We reported on the scam earlier, but felt that a new warning was necessary.

THE IRS WILL NEVER CALL YOU UNTIL THEY HAVE MADE SEVERAL CONTACTS BY MAIL. THE IRS WILL NEVER CONTACT YOU BY E-MAIL. 

Listen below to a recording of one of these criminals attempting to get an unsuspecting target to send them some cash.

The scammers know that only a very few people will fall pray to their trap. So they call thousands of numbers hoping to just get a few to take part.  They have honed their pitch to make it sound very convincing. We all get a bit tense when we are dealing with an authority like the IRS. Some folks will allow fear to overcome common sense. 

That is why we try to make the situation simple. The IRS will always send you two to four letters asking you to call them before they call you.  They will not threaten you, but ask how you want to pay what you owe.  If you owe less than $20,000 and can make 60 equal monthly payments to fully pay your liability in five years, your best move is to call the IRS directly. For these smaller amounts, the agents are generally reasonable in trying to help you set up a payment plan.

However, if you owe more than $20,000 your smartest move is to call a tax professional like the ones at Demetriou, Montano & Associates. We can help you negotiate an acceptable payment plan or settlement.  Call now at 888-987-1040 to speak with an Enrolled Agent.

Tax Avoidance or Tax Evasion – The Difference Can Result in Jail Time

“I’m 80% sure the home interest deduction doesn’t apply to me, but I’m going to take it anyway.”

“I won some money in Vegas, but I ‘forgot’ how much and there is no record.”

“I don’t get a W-2 or 1099 for half of my income, the IRS will never know.”

Tax avoidance?  Not a chance.   Black’s Legal Dictionary, Avoidance of Tax - “the method by which a taxpayer reduces his tax liability without committing fraud.”

In other words, tax avoidance is using all legal means to reduce your tax liability and we all have the right to avoid taxes.

When does tax avoidance reach the level of tax evasion?  Most of the time, just like the above, people know when they are doing something wrong or fraudulent.  Regrettably some folks do not know you can go to jail for tax evasion.  Some folks who have taken part in such schemes have found themselves not only owing hundreds of thousands of dollars to the taxing authorities, both federal and local, but also facing jail time. A good rule of thumb when evaluating such schemes might be, “If it sounds too good to be true, it probably is.”

Some taxpayers participate in obvious tax evasion as a daily practice.

·      Cash transactions that never see the books.

·      Paying employees “off books” to avoid employment taxes

·      Failing to report income with full intent to evade paying taxes

·      Trumping up expenses that have absolutely no basis in reality

·      Keeping two set of books

The result of these evasions can result in significant fines or even jail time.  Two recent convictions turned out badly for the miscreants (from http://www.taxproblemattorneyblog.com):

Horany, a business owner, admitted to underreporting his income by approximately $175,000, which resulted in his underreporting his tax due and owing by over $60,000 in 2007 alone. In total, Horany underreported his tax due by more than $145,000; he was sentenced to 12 months in prison for his actions. Sometimes taxpayers try to convince themselves that the IRS won't go after them because they are "minnows." This case is a warning that it is not necessary to evade millions of dollars in taxes in order to be prosecuted for tax evasion.

Sathre, also a business owner, was a much bigger fish; he pled guilty to charges of tax evasion and was sentenced to 36 months in prison and was ordered to pay $3,113,882 in restitution for willfully evading payment of his taxes for 1995 and 1996. According to the Department of Justice press release, Sathre concealed income from a property he sold, for which he received over $3 million in installment payments. Sathre compounded the problem by sending over $500,000 during 2005 and 2006 to an offshore bank account in the Caribbean, and later wired $900,000 from the sale of another property to the same offshore account in an attempt keep the funds out of the reach of the IRS. In addition, Sathre supplied the Caribbean bank with false declarations and false promissory notes and also claimed he was neither a citizen nor a resident of the United States. Although not mentioned in the press release, one would assume that Sathre also failed to file Foreign Bank Account Reports (FBARs) on TD-F 90-22.1 (now known as FinCEN Form 114). These criminal tax cases (among many others) demonstrate that the IRS takes the issue of underreporting income very seriously and will not hesitate to press for a prison sentence in cases involving tax evasion.

So where should you draw the line. You should take advantage of every possible expense deduction and loophole regarding earnings, but understand that when you go too far, it may cost you dearly in dollars or even a unexpected vacation in the Federal penitentiary.

Business Owners and Companies Commonly Get Into Tax Problems - Solutions

How to Quickly Find Yourself With a Big Tax Problem

Your business was on a roll!  Five years of great sales and profits.  You had money in the bank, suppliers paid with discounts, and your personal paycheck was making your spouse very happy.  It doesn’t get better than this.

Then it hit:

·      Economic slowdown. Lower sales. Collections drop. Inventory piles up.

• Unexpected legal expense
• Major employee leaves
• Major product line problem
• New competitor slices into sales
• Large customer drops you
• Natural disaster

Maybe it is one of the above. Sometimes it takes more than one to create the cash flow crisis. The cause is only slightly relevant.  The reality is that you don’t have the cash needed to make your IRS payments.  The issue might only be your income taxes.  But your situation could be compounded by missed payroll tax deposits, and even state income, payroll, and sales taxes.

If the economic interruption is protracted, losses may begin to exacerbate the issue. While these losses may reduce future tax obligations and even be used to reduce prior year obligations, they do nothing to help with payroll tax obligations, either corporate or personal.

Don’t expect a sympathetic ear at the IRS.  If anything they will be worried about not getting their share if you go bust.  Liens and levies can further complicate your efforts to get your business back in shape.

You need a tax professional like the Enrolled Agents at Demetriou, Montano, and Associates to help guide you through the process.  We know what to say to the Revenue Officers, and more importantly, what not to say.  After 25 years helping businesses like yours in situations just like the one above, we have the tools and skills to keep the tax man happy while you rebuild.  Call right now at 888-987-1040 and sleep better tonight.

Even the IRS Wants You to Love Them – Agency Under Fire

In the face of the IRS targeting scandal, a new “Bill of Rights” is offered

The IRS is reeling from a relentless barrage of negative headlines surrounding Lois Lerner and others, known and unknown, within the agency, who have admitted to targeting conservative organizations in the run-up to the 2012 election. But even the IRS appears to need your love. In yet one more coincidence, they have release a “new” taxpayer bill of rights.

"The Taxpayer Bill of Rights contains fundamental information to help taxpayers," said IRS Commissioner John A. Koskinen. "These are core concepts about which taxpayers should be aware. Respecting taxpayer rights continues to be a top priority for IRS employees, and the new Taxpayer Bill of Rights summarizes these important protections in a clearer, more understandable format than ever before."

This updated bill of rights will be included in any mailing that the IRS does to taxpayers, but should never be confused with any idea that the agency is not relentless in their desire to collect from you. The summary of the new bill of rights:

1. The Right to Be Informed
2. The Right to Quality Service
3. The Right to Pay No More than the Correct Amount of Ta
4. The Right to Challenge the IRS’s Position and Be Heard
5. The Right to Appeal an IRS Decision in an Independent Forum
6. The Right to Finality
7. The Right to Privacy
8. The Right to Confidentiality
9. The Right to Retain Representation
10. The Right to a Fair and Just Tax System

If you are currently facing any type of “quality service” from the IRS that is taking the form of demand letters, liens, levies, wage garnishments, or other collection activity, you have, under #9 above, the right to retain representation. If you owe more than $20,000 in back taxes or if you have unfiled returns, you should look at this right as a strong recommendation. The IRS has a vast array of resources that they will use against you to help them keep you up at night, and generally make your life miserable.  We can help!

As Enrolled Agents, we can represent you every step of the way. You no longer have to deal with the collection agents. No more phone calls. We will be copied on all correspondence, so you have no need to worry about the letters you receive. We will handle it all. 

And because we have been working with the IRS on behalf of taxpayers just like you for over 25 years, we know exactly how to get the best possible solution for your specific issue. Call 1-888-987-1040 right now and let us start to resolve your tax debt issues. Also see our website at http://taxrepair.com