Tag Archive for Washington D.C.

Interest Rates Increase For The Second Quarter Of 2018

WASHINGTON – The Internal Revenue Service today announced that interest rates increased for the calendar quarter beginning April 1, 2018.  The rates will be:

  • five (5) percent for overpayments [four (4) percent in the case of a corporation];
  • two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000;
  • five (5) percent for underpayments; and
  • seven (7) percent for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.  Read More

Written by | Posted in Interest Rate • IRS

Finance On New Tax Issues You May Encounter This Tax Season

National Taxpayer Advocate Nina Olson recently spoke with Yahoo! Finance on new tax issues taxpayers may face during the filing season this year. During the brief interview, Ms. Olson highlights the scope of what the Taxpayer Advocate Service does to help taxpayers experiencing IRS tax issues find resolution. Additionally, she offers recommendations on how to navigate the tax landscape this year in order to be in compliance with the tax law.

The National Tax Advocate further warns taxpayers of newly formed tax scams and how to detect these tax thieves when contacted. The NTA concluded the interview with details on how to claim newly restored tax benefits, if eligible, recently extended by Congress for tax year 2017. Read More

Written by | Posted in IRS • National Taxpayer Advocate • Tax Season

Earned Income Tax Credit (EITC) – How A Simple Educational Letter Can Help Avert Noncompliance

Can a simple educational letter to taxpayers who appear to have erroneously claimed the earned income tax credit (EITC) actually avert future noncompliance? Based on recent TAS research studies, the answer appears to be yes.

As readers of this blog already know, the EITC is a refundable credit designed to provide financial support to low income working taxpayers, especially those with children in the household. Because it focuses on household composition, the administration of the credit is very complex. While the IRS can generally establish the age of the child from various government databases, and sometimes the parent-child relationship, it cannot easily establish other relationships nor can it independently determine with whom the child lived for over half the year, as the law requires. Read More

Written by | Posted in Earned Income Tax Credit • EITC • National Taxpayer Advocate

IRS Alerts Taxpayers About Refund Scam

The IRS warns taxpayers of a new twist on an old scam. Criminals are depositing fraudulent tax refunds into individuals’ actual bank accounts, then attempting to reclaim the refund from the taxpayers.

Here are the basic steps criminals follow to carry out this scam. The thief:

  • Hacks tax preparers’ computers to steal taxpayer data.
  • Uses the stolen information to file tax returns as the taxpayers.
  • Has refunds deposited into taxpayers’ bank accounts.
  • Contacts their victims, telling them the money was mistakenly deposited into their accounts and asking them to return it.

Read More

Written by | Posted in IRS • IRS Scam • Tax Refund

IRS Notice States Taxpayers Will Not Be Able To Circumvent Three-Year Rule Using S Corporations

WASHINGTON — The Internal Revenue Service announced today that S corporations are subject to the extended three year holding period for applicable partnership interests and that regulations will be issued soon.

Carried interests are ownership interests in a partnership that share in the partnership’s net profits.  Carried interests often are issued to investment managers in connection with the investment manager’s services.  These interests often result in the holder receiving capital gains which are taxed at a lower rate, rather than ordinary income. Read More

Written by | Posted in IRS • S-Corp

Calculator Helps Taxpayers Review Withholding For New Tax Law

WASHINGTON –The Internal Revenue Service today released an updated Withholding Calculator on IRS.gov and a new version of Form W-4 to help taxpayers check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act in December.

The IRS urges taxpayers to use these tools to make sure they have the right amount of tax taken out of their paychecks.

“Following the major changes in the tax law, the IRS encourages employees to check their paychecks to help ensure they’re having the right amount of tax withheld for their personal situation,” said Acting IRS Commissioner David Kautter. Read More

Written by | Posted in Tax Cuts Jobs Act • Withholding Calculator

Interest On Home Equity Loans Often Still Deductible Under New Law

WASHINGTON – The Internal Revenue Service today advised taxpayers that in many cases they can continue to deduct interest paid on home equity loans.

Responding to many questions received from taxpayers and tax professionals, the IRS said that despite newly-enacted restrictions on home mortgages, taxpayers can often still deduct interest on a home equity loan, home equity line of credit (HELOC) or second mortgage, regardless of how the loan is labelled. The Tax Cuts and Jobs Act of 2017, enacted Dec. 22, suspends from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan. Read More

Written by | Posted in Home Equity Loan • IRS • TaxConnections

Fisherman Hooked On March 1st 2018 Estimated Tax Deadline

WASHINGTON ― The Internal Revenue Service is reminding fisherman about the March 1 deadline to take advantage of special rules that can allow them to forgo making quarterly estimated tax payments.

Anyone with income from their fishing business may be able to avoid making any estimated tax payments by filing their 2017 return and paying the entire tax due on or before March 1, 2018. This rule generally applies if farming or fishing income was at least two-thirds of the total gross income in either 2017 or the preceding tax year. Read More

Written by | Posted in Fishing Business • IRS • Tax Deadline

IRS Rolls Out Passport Certification Program, Refusing To Adopt Taxpayer Protections And Exclude Taxpayers Working With TAS

On Jan. 22, 2018, the IRS began implementation of the passport certification program. IRC § 7345 authorizes the IRS to certify a taxpayer’s seriously delinquent tax debt to the Department of State for the purposes of passport denial, limitation, or revocation. A seriously delinquent tax debt is an assessed, individual tax liability exceeding $51,000 for which either a notice of federal tax lien has been filed or a levy has been made. IRC § 7345(b)(2) provides exceptions for current installment agreements (IAs), offers in compromise (OICs), and Collection Due Process (CDP) hearings. In addition, the IRS has created certification exclusions, such as for taxpayers in currently not collectible (CNC) hardship status and those with pending IAs and OICs. IRM 5.19.1.5.19.4 includes the full list of current discretionary exclusions.   Read More

Written by | Posted in IRS • Passport Certification Program

IRS Recommends Steps To Minimize Effect Of Data Theft

Every day, the theft of personal and financial information puts people at risk of identity theft. Generally, thieves try to use the stolen data as quickly as possible to:

  • Sell the information to other criminals.
  • Withdraw money from a bank account.
  • Make credit card purchases.
  • File a fraudulent tax return for a refund using victims’ names.

Victims of a data loss should follow these steps to minimize the effect of the theft: Read More

Written by | Posted in Data Theft • IRS • Theft

Nonresident Aliens Still Facing Hardships In Obtaining Refunds Of Withheld Tax

Imagine how you would feel if you were expecting your tax refund to arrive imminently, and checked the mailbox or your bank account day after day, only to be disappointed. Finally, you receive the hoped-for letter from the IRS, which you open eagerly. Disappointed to find no refund check enclosed, you read a letter that in part says, “We’re holding the portion of your refund that relates to the withholding credit you claimed…while we review it. Our review can take up to 6 months from the date we received your return or the due date of the return, whichever is later.” Read More

Written by | Posted in National Taxpayer Advocate • Nonresident Alien

Security Summit Partners Warn Tax Pros Of Heightened Fraud Activity As Filing Season Approaches

WASHINGTON – The Internal Revenue Service, state tax agencies and the tax industry today warned tax professionals of early signs that cybercriminals already are at work as the nation’s tax season approaches. Fraudsters are using a new round of emails posing as potential clients or even the IRS to trick tax practitioners into disclosing sensitive information.

The Security Summit partners encourage tax practitioners to be wary of communicating solely by email with potential or even existing clients, especially if unusual requests are made. Data breach thefts have given thieves millions of identity data points including names, addresses, Social Security numbers and email addresses. If in doubt, tax practitioners should call to confirm a client’s identity.  Read More

Written by | Posted in Fraud • IRS • TaxConnections
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