Every tax season, someone will fall victim to a tax preparer fraud scheme. Most incidents occur towards the end of tax season and in low-income neighborhoods. The most common schemes are: inflating personal or business expenses; false deductions or income; and unallowable credits or excessive exemptions. Tax preparer scammers will use these schemes as a way to inflate your refund and keep the money for themselves. Continue reading
Category Archives: Blog
Five Things to Look for When Hiring a Tax Attorney
Many Americans are faced with an IRS problem every year. If you happen to fall into this situation, it is important that you seek the help and advice of a qualified tax attorney. While there are many reasons to hire one attorney over another, here are five important things to look for when hiring a tax attorney for your case. Continue reading
Are Your IRS Transcripts Safe?
The IRS’s “Get Transcript” application has fallen into the hands of unauthorized individuals who have gained access to IRS information. This data included taxpayers’ Social Security information, day of birth, street address, and contact information. Continue reading
have gained access to IRS information. This data included taxpayers’ Social Security information, day of birth, street address, and contact information. IRS Whistleblowers: Who and What they are
A Whistleblower is a person who is paid by the IRS Whistleblower Office in result of blowing the whistle on individuals who have failed to pay the tax that they owe. If the IRS uses information given by the whistleblower, they can be rewarded up to 30% of the additional tax. The primary purpose of the Whistleblower Award is to encourage people with the knowledge of significant tax disobedience to come forward and provide information to the IRS. The IRS vision of the Whistleblower Informant Award includes broadening the program’s reach and providing better communication with existing and potential whistleblowers. Continue reading
A Whistleblower is a person who is paid by the IRS Whistleblower Office in result of blowing the whistle on individuals who have failed to pay the tax that they owe. If the IRS uses information given by the whistleblower, they can be rewarded up to 30% of the additional tax. The primary purpose of the Whistleblower Award is to encourage people with the knowledge of significant tax disobedience to come forward and provide information to the IRS. The IRS vision of the Whistleblower Informant Award includes broadening the program’s reach and providing better communication with existing and potential whistleblowers. How Well is the IRS Handling Taxpayer Phone Calls?
For the past few filing seasons, the IRS has been under difficult workplace circumstances. The IRS has had to deal with low funding, fewer employees, and lack of motivation to answer customer’s calls. This affects the IRS’s ability to give proper customer service to taxpayers. In a report by Head Taxpayer Advocate Nina E. Olson, statistics on the IRS’s poor phone service performance was noted frequently. Continue reading
How Does Gambling Lead to Tax Problems – In Michigan it’s Worse
In Michigan, gamblers at the casino are required to report any and all winnings on their tax returns. However, you cannot deduct your losses. If you play cards, pull slots, or gamble in any other way your winnings are taxable. Here are a few tips to help steer clear from trouble with the IRS: Continue reading
returns. However, you cannot deduct your losses. If you play cards, pull slots, or gamble in any other way your winnings are taxable. Here are a few tips to help steer clear from trouble with the IRS:Contacted
Have you been contacted by an IRS Revenue Officer?
The following situation is a very common one:
You return home from your day at work to find that an IRS Revenue Officer has stopped by your home. You see a “final demand” notice along with their business card in your door. Revenue Officers are trained collection agents for the IRS that specialize in getting cases closed as expeditiously as possible. This means they are not looking out for the best interest of the taxpayer, and they will likely aggressively pursue whatever avenues are available to them to get you to pay up. It is also a common procedure for a Revenue Officer to request to meet with you for an in-person interview. This puts you at risk of providing them with more information than is legally required.
If you are contacted by an IRS Revenue Officer, you have the right to be represented by a CPA or tax attorney. A CPA or tax attorney will make sure you are protected from levy and asset seizure, and that all legal procedures are followed. When a taxpayer has a CPA or tax attorney representing them, all correspondence and interviews will be conducted between the Revenue Officer and your CPA or tax attorney, therefore eliminating the potential hazards of saying too much.
Inside the IRS
IRS employees do not have it easy.
The IRS has been slimming down in many ways. Last year, the agency had lost 11 percent of its workers. Vital office employee positions, such as secretary positions, have had a hiring freeze for four years. This hiring freeze has impacted all employees because they must take on additional duties along with their everyday work schedules. Furthermore, 40 percent of customer service calls during tax season will be put on hold or through to someone else, in many cases over an hour. Lastly, IRS employees have strict travel restrictions in place.
So what does this mean for people with tax problems?
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Longer hold times or more frequent disconnections for taxpayers calling the IRS.
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Denial of requests due to excessive work load of IRS employees.
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Negative employee morale, leading to unpleasant customer service aid.
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Increased amount of stress for taxpayers.
Lothamer Tax Resolution understands your tax needs and are here to help. At Lothamer Tax Resolution, we take your tax problems seriously with face-to-face consultations catered to your needs. Call today at (800)-619-8277 to schedule your initial consultation. We take pride in providing personal consultation help that will enable you to get on with your life.
How Does the IRS Select Returns for Audit?
Although the IRS does not have a set list of items that a return can be audited for, there are some general items that may make a return more likely to be audited.
some general items that may make a return more likely to be audited.- The IRS may audit or make an adjustment to a return when the information reported to the IRS by employers, banks, etc. does not match the information reported on the tax return
- One or more IRS “red flag” items are on a return:
- Home office deduction
- High itemized deductions
- Multiple years of Schedule C losses
- High auto or travel deductions
- Rounded numbers on a return
- Large changes or fluctuations with a return from year to year.
- Audits of related returns. For instance, if your business is audited, your personal return may subsequently be audited based on changes made to the business return.
- Random selection. The IRS does audits for statistical purposes. These are done at random and generally require the taxpayer to substantiate all/most items on their tax returns.
- Possible tax fraud, tips to the IRS, or information reported from State or local compliance.
As a taxpayer, it is your responsibility to provide documentation and authority supporting the items and positions taken on your return. The IRS generally has three years from the date the return was filed to assess additional tax. However, that can be extended to 6 years in cases where more than 25% of the income was not reported, and indefinitely for a return where there is fraud.
It is important that you keep all of your records in a safe, dry place. It is also advisable to keep duplicate copies of records in different formats (electronic and print versions) and different locations in case one set gets destroyed. It is often very difficult and expensive to try to get prior years’ statements in the year of the audit in order to attempt to create your records.
If you are thinking about filing a return that has an item you believe may result in a future audit, you should contact a CPA or Tax Attorney prior to filing to ensure that you are taking a proper position on the return. If you later receive notice of audit, you should again contact a CPA or Tax Attorney to represent you before the auditor.
IRS Audit? We Can Help!
Have you recently received notice that the IRS is auditing your tax return? There are steps that you can take to help minimize or eliminate IRS adjustments to your returns.
Once you have received notice that the IRS is auditing your return(s), you should seek the assistance of a CPA or Tax Attorney right away. Audits generally require a large amount of data compiling and technical communication with the IRS. These are things best handled by a CPA or Tax Attorney. As a taxpayer, you are entitled to representation and are generally not required to meet directly with the auditor.
The audit letter should contain a list of items that the IRS is auditing. As the taxpayer, it is your responsibility to provide documentation supporting the items claimed on your return. Once you have the list of items that the auditor is looking for, you (or your CPA or Tax Attorney) need to start compiling the documentation to support each item. BE ORGANIZED! You will have much better results if you provide the IRS with organized and compiled data, instead of just providing them with a box of random receipts or documentation.
Generally, you should only provide the auditor with the information requested. However, if as you are going through your documentation you realize that you omitted a potential deduction from your return, you can also provide this information to the auditor to have that item added to the return.
When dealing with an auditor, it is important to remain courteous and professional at all times. As audits are generally very emotional and frustrating for taxpayers, this is another reason that you should seek the assistance of a CPA or Tax Attorney. Becoming hostile or unresponsive to an auditor can have a seriously negative impact on your audit. It is also important to remember that auditors are not your friend. Although you may not realize it, many of their questions are intended to elicit additional information that may be used against you in your audit.
IRS Tax audits are a serious event and if not handled properly can result in huge amounts of additional tax and penalties being assessed against a taxpayer. If you receive an audit notice, immediately contact a CPA or Tax Attorney for assistance in handling the audit.