When Will I Get My Stimulus Check?

Consumers who qualify to receive economic stimulus rebates from the government were told today that the calendar had been moved up for the payments.

The Internal Revenue Service maintains a terrific resource on all things stimulus payment.

The page includes all of the information consumers need to know about receiving cash from Uncle Sam soon. Highlights you want to know are the phase out amounts (well over $100K for most two income couples), direct deposit of the payment if you had a refund already and even a calendar for payments (some taxpayers receive money as early as next week).

Remember: don't bank on the whole amount. Get a copy of your federal return, and use the IRS calculator to determine how much of the $600 per adult and $300 per child under the age of 17 you will receive.

Labels: economy, IRS, taxes

posted by George Bounacos at 12:21 PM | 0 comments
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  Income Tax Countdown - 1 Week To Go, 12 Scams To Watch For


Consumers who gave the federal government an interest-free loan for up to a year during 2007-2008 have undoubtedly filed for and may have even received their refund check by now.

Two words: Stop that!

There is absolutely no need for any consumer to receive a substantial income tax refund. Please consult with a tax professional if you are one of those people who consistently receive a refund. Many consumers we have talked with tell us that they view these refunds as "savings" and "found money" that they get every spring for big bills.

Nonsense.

That money is yours, and you received no interest or other compensation. Even if you receive a $1,200 refund, that means that you could have brought home an extra $100 each month during 2007. If you're carrying credit card or other debt and also receiving a refund, you've lost twice -- the government took more of your money without paying interest, and you paid interest on money you had borrowed.

Find an accountant or tax advisor.

For those of you who are waiting to file during the last 200 hours of the regular season, the Internal Revenue Service issued its "Dirty Dozen" list of scams targeting taxpayers. As befits any IRS document, there are too many words, so let's boil it down fast so you can get back to finding those receipts:

1. Phishing - This is the scam where you get email that looks like it's from one organization, but it really isn't. The solution is simple, especially with financial and other personal email. Open your browser and type the organization's address in, along with any extensions you found in the email.

2. Stimulus Payment Questions - You may have heard that you're due a check in May or June if you paid federal income tax in 2007. This so-called "stimulus" payment is automatic. You don't have to do anything, and you should run away from anyone who tells you they need information to process yours.

3. Frivolous Arguments - Very simply, you have to pay federal income taxes. If you don't, your tax professional will explain why. Verify that person's explanation with the IRS.

4. Fuel Tax Credit - Best left for professionals or the IRS Help Line. If you don't understand the intricacies, don't try at home with a calculator with keys sticky from Saturday morning pancake syrup.

5. Hiding Money Offshore - If you're in that financial demographic and reading this blog, have we got a deal for you. Write us. We'll help you invest wisely.

6. Avoiding Roth IRA Limits - Does the deal sound too good to be true? It probably is, especially if a financial consultant just told you that they can avoid the federal IRA limits.

7. Sending A "Corrected" W2 or 1099 - Yes, you're going to get caught. No, the people who work at the IRS are not that dumb. If you have a W2 that claims $X and you try lowering your taxes by submitting a "corrected" form, you will indeed face a form of corrections.

8. Abatement Requests - If you don't know, don't ask. If you're told you should, ask a second professional. (Are you sensing a theme?)

9. Tax Preparer Scams - There are good and bad people in every professional. A nice office or brand name from a national chain is meaningless. Check with your local or state government agencies before entrusting your financial future to a stranger.

10. Forming "Shell" Companies - Not the gas station, but a bogus corporate entity that lets you shift income around when it is really personally taxable. Yep, they know this one too.

11. Misuse of Trusts - There is a very legitimate financial need to use trusts in estate and financial planning. Be sure your financial planner and tax advisor are on the same page and understand. Don't unintentionally make a mistake by trusting someone who didn't know the full picture.

12. Charitable Donations - The IRS specifically singled out the notion of taxpayers disguising private school tuition payments as charitable donations. That's pretty slick and pretty stupid. Here is the deal on charity: read the rules. If you're not preparing your taxes, don't overstate the condition, original cost or value of items you've donated. Get a detailed receipt. Take pictures. Do what you need to do to prove your donation.

We're not tax or financial professionals. This is merely a synthesis of a news item the Internal Revenue Service shared with taxpayers. If you have questions or concerns, contact your local IRS office or talk with a tax professional.

Labels: IRS, scam, tax deadline, taxes

posted by George Bounacos at 9:15 AM | 0 comments
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  IRS Collection Agents For Hire Collect Less Than 5% Of Assigned Accounts

We have railed against the Internal Revenue Service using private tax collectors for a long time. At the very least, having tax data in non-IRS control is just bad policy especially since we read every so often about the agency's own employees being terminated for snooping around tax files belonging to celebrities or neighbors.

We hate the notion that a collection agent, regardless of how many documents are signed, can be given access to the same kind of information. We know that the information is given when taxes are allegedly owed (although dispute issues still remain unclear), but having federal tax information in the hands of private companies incentivized to collect revenue gives us a bad feeling.

Things are looking up, however, because even IRS Taxpayer Advocate Nina Olsen reported to Congress that the private debt collectors are "falling far short" of the IRS' goals. We were worried about privacy issues, but we should have been worried about the program's management.

Olson reported to Congress that the private collection agencies only managed to collect $31 million of more than $180 million expected. Worse, the program cost more than it took in. The IRS sold this program to legislators by claiming that the program would generate $1.5 billion to $2.2 billion over a 10 year period. Right now, the program is only $1.47 billion behind for the next 9 years.

To her credit, Olson continues to call for the program to end. To buttress her argument, she shared that the collection agents are not required to divulge the scripts their agents use when calling potential debtors, or as we like to call them, citizens. The IRS is reportedly blind to the scripts used (which none of us who have ever hired a call center would ever allow) and the program continues on in 2008.

Are you outraged yet? Good. Contact your local legislators. If you're not sure who to contact, here are links for the House of Representatives and the U.S. Senate. Tell your representatives that you won't tolerate gross financial mismanagement, lack of accountability from private contractors doing government work you pay for and taxpayer information released to non-government employees.

Labels: collections, IRS, taxes

posted by George Bounacos at 10:19 AM | 0 comments
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  Millions of Consumers Face Tax Filing Delay

If taxes are, along with death, certain, than consumers anticipating a refund are also almost certainly anxious to file as soon as possible each new year.

Tax refunds are never a good thing. Receiving a tax refund means that a consumer has essentially given the federal government an interest free loan. Worse, if the consumer is carrying debt and uses the refund to help pay that debt, accruing interest could have been avoided by having the proper amount withheld.

Yet another wrinkle occurs when consumers are subject to the Alternative Minimum Tax (AMT). As a result of tax code changes enacted in December, the rules covering who is affected by AMT and by how much have changed. IRS computers will need to be re-programmed according to the tax collection agency. As many as 4 million consumers could potentially be affected by these changes, with the biggest change being that their federal returns cannot be filed until February 11, 2008.

That date is being called a "target date" by the IRS and is obviously subject to change. Consumer Help Web will keep you posted on new announcements.

More tax return delay information is available at the IRS site.

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Important Note: This information is presented for news and information purposes. Consumer Help Web, Inc. is not a tax preparation entity, nor is this legal or financial advice. Consult your tax advisor or the Internal Revenue Service for more information on how this delay could impact you.

Labels: IRS, taxes

posted by George Bounacos at 1:30 PM | 0 comments
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  IRS Private Tax Collectors To Stop Activities

We told you two years ago about the IRS retaining private debt collectors for income tax. The House of Representatives, led by rising Dem star Chris Van Hollen of Maryland, voted by a wide margin to end the program.

Van Hollen used strong words when speaking against the program, which was controversial from its inception and suffered from higher than anticipated start up costs. Republicans claimed the program had not been given enough time to work while Democrats said the initial results precluded the program from continuing.

When we spoke with consumers, most were less concerned about a private agency collecting money owed the government, but expressed uneasiness over tax records, even if only the amount due, being shared with a non-governmental agency. As one taxpayer told us, "What if the person is appealing the tax bill or fighting it? The IRS already makes enough mistakes. I wouldn't want them telling collection agencies I was a deadbeat."

Labels: collections, IRS, taxes, Van Hollen

posted by George Bounacos at 11:22 PM | 0 comments
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  IRS and Justice Dept Give Last Minute Tax Warnings

To curb the marketing of tax shelters to corporations and individuals, the Justice Department's Tax Division has helped the IRS to identify and pursue nearly every customer who engaged in certain abusive tax shelter transactions, while at the same time pursuing the professionals who designed, facilitated or accommodated the underlying tax shelter transactions.

Bringing Fraudulent Tax Return Preparation to a Halt

The Tax Division continues to bring civil injunction suits to stop tax preparers who habitually prepare bogus tax returns. In response to the government's efforts, courts across the country have barred tax preparers from preparing inaccurate returns.

Since January 2001, the Justice Department has sought and obtained injunctions against more than three dozen tax return preparers, including 18 since January 2006. It expects to obtain many more injunctions throughout the year. The United States recently has obtained injunctions that barred the following schemes by tax preparers:

*Filing tax returns that falsely report "zero income";

*Claiming that only income from a foreign source is taxable, using a spurious interpretation of Section 861 of the Internal Revenue Code; *Claiming personal living expenses as business expenses;

*Preparing amended tax returns to claim tax refunds without customers' knowledge or consent; and

*Asserting that casino gaming proceeds paid to Native Americans are exempt from federal income tax.

The Department of Justice also has obtained injunctions against employers who fail to withhold, account for, and pay over employment and withholding taxes and against return preparers who prepare related false returns.

Stopping Tax Evasion

During fiscal year 2006, the Justice Department's Tax Division authorized prosecutions of nearly 1,200 defendants for tax crimes, an increase of more than 34 percent over the number authorized for prosecution in 2001. The Tax Division's criminal enforcement priorities include investigating schemes that involve:

*Using trusts or other entities to conceal control over income and assets;

*Shifting assets and income to hidden offshore accounts;

*Making false statements to the IRS in order to claim tax refunds;

*Selling and promoting fraudulent tax avoidance schemes;

*Using frivolous justifications for not filing truthful tax returns;

*Failing to withhold, report and pay payroll and income taxes;

*Failing to report income on individual and corporate returns; and

*Failing to file tax returns.

*Stopping the Promotion of Tax Fraud Schemes

Since April 2006, the Justice Department and the IRS have vigorously pursued the promoters of tax fraud schemes to stop their activity and to warn would-be promoters that promoting tax fraud schemes leads nowhere but to a federal court injunction or to a long stay in jail.

Since January 2001, the Justice Department has sought and obtained injunctions against nearly 200 promoters of tax fraud schemes, including 66 since January 2006. These injunctions have stopped promoters from selling tax evasion schemes on the Internet, at seminars, or though other means. The tax-scam promoters the government has sought to enjoin have cost the U.S. Treasury an estimated $2.5 billion, and have had an estimated 500,000 customers. Among the government's results in this area are:

In May 2006, David Carroll Stephenson was sentenced to eight years in prison in connection with his promotion of a tax evasion scheme using "pure equity trust" organizations.

In June 2006, a federal judge sentenced five defendants, Dennis Poseley (seven years), David Trepas (five years), Patricia Ensign (18 months), Rachel McElhinney (16 months), and Keith Priest (18 months), to prison terms for their respective roles in promoting a tax evasion scheme that used offshore trusts and bank accounts.

On June 22, 2006, District Judge Elizabeth Kovachevich issued an injunction permanently barring Douglas Rosile, a former certified public accountant whose clients included Wesley Snipes, from preparing federal income tax returns for others and from promoting a frivolous tax argument based on Section 861 of the Internal Revenue Code. Among the documents the government filed in court was a return submitted to the IRS on behalf of Snipes claiming a bogus $7.3 million tax refund.

In November 2006, a federal judge sentenced Milton H. Baxley II to 18 months in prison and fined him $10,000 for contempt of court. On August 9, a jury convicted Baxley on two counts of violating an injunction order barring him from promoting a tax fraud scheme. In December 2006, a federal judge sentenced Thomas Miller to nearly four years in prison for conspiring to defraud the United States in connection with a "pure trust" tax fraud scheme. Miller operated Freedom Education Center, a business in California that sold anti-tax literature and helped people create bogus trusts.

Curbing High-End Tax Shelters

During the past year, the Justice Department and the IRS have continued their vigorous enforcement efforts against the promoters and facilitators of abusive tax shelters. Abusive shelters for large corporations and high-income individuals have cost the U.S. Treasury billions annually, according to Treasury Department estimates. The Tax Division also has had great success in federal court defending the U.S. Treasury against tax shelter-related claims of large companies and individual investors. The Tax Division is currently litigating approximately 86 tax shelter cases or groups of cases, including 47 separate cases involving the Son of BOSS tax shelter. Among the successes during the past year in this area are the following:

In December 2006, Utah businessman Chandler S. Moisen pleaded guilty to conspiracy and wire fraud in connection with a criminal probe of tax shelters promoted by a group of KPMG, LLP executives. In January 2007, Steven Michael Acosta, a former KPMG manager, pleaded guilty to four felony tax charges in connection with his involvement in KPMG's promotion of tax shelter transactions.

The Supreme Court let stand the decision of the U.S. Court of Appeals for the 6th Circuit that the COLI (corporate-owned life insurance) program The Dow Chemical Company used to claim more than $33 million of tax deductions was an economic sham.

The Supreme Court also let stand the decision of the U.S. Court of Appeals for the Federal Circuit that the IRS was right to disallow the $375 million loss Coltec Industries claimed from its "contingent liability" tax shelter.

The U.S. Court of Appeals for the 2nd Circuit held that the IRS properly disallowed the losses General Electric Capital Corporation claimed from its participation in an equipment leasing tax shelter, resulting in $62 million in additional income taxes. The U.S. District Court for the Middle District of North Carolina granted summary judgment for the United States in the first Lease In - Lease Out (LILO) tax shelter to go to court, BB&T Corporation v. United States.

The U.S. Court of Appeals for the Federal Circuit ruled for the United States on an issue raised by tax shelter participants in several tax shelter refund suits in A D Global Fund, LLC v. United States. The court ruled that the statute of limitations on the return of a person who participates in a tax shelter partnership does not expire at least before the statute of limitations on the partnership's return does.

Coordinated Civil and Criminal Proceedings

The government brings both its civil and its criminal tools to bear in the fight against tax fraud. An ongoing tax scam causes continuing harm to the federal Treasury and it leaves participants owing taxes, interest, and often, penalties. The government does not wait until a criminal case has been developed to take action to stop the scam. Rather, the Justice Department brings civil injunction suits to stop both the promotion of tax scams and the preparation of false or fraudulent returns. Additionally, in appropriate cases, the Justice Department brings criminal charges against the promoters, preparers, and scam participants to punish them for their unlawful conduct.

Labels: IRS, Justice Department, taxes

posted by Consumer Help Web Editorial Team at 6:21 AM | 0 comments
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  IRS Says 30% Of All Taxpayers Don't Claim Their Tax Refund

The Internal Revenue Service urged taxpayers to check to see if they qualify for the telephone excise tax refund after more than 10 million early filers did not request the one-time refund.

The agency said that about 30 percent of all taxpayers did not request the telephone tax refund.

“Many taxpayers are overlooking this special refund and the chance to get a bigger refund,” said IRS Commissioner Mark W. Everson. “We encourage taxpayers to spend a few extra minutes reviewing their tax return to make sure they are making an accurate request. A little extra time can mean a bigger refund check.”

The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. Federal officials also authorized a one-time refund of the federal excise tax collected on service billed during the previous 41 months, stretching from the beginning of March 2003 to the end of July 2006. The tax continues to apply to local-only phone service.

To make the refund easier to figure, the government established a standard refund amount, based on personal exemptions, ranging from $30 to $60. If taxpayers have phone bills and other records, they can request the actual amount of excise tax paid. Though using the standard amount is optional, it is easy to figure and approximates the eligible amount for most individual taxpayers. Taxpayers only have to fill out one line on their return, and they don’t need to present proof to the IRS.

Out of the tax returns filed through Feb. 16, more than 10 million taxpayers did not request the telephone tax refund. And nearly half of those returns — more than 4.8 million — were completed by a tax preparer.

“We are surprised how many tax preparers are overlooking the telephone tax refund,” Everson said. “We want all taxpayers entitled to this refund to get it, whether they are using a tax preparer or doing the return themselves.”

For people requesting the telephone tax refund, it adds $30 to $60 — or even more — onto a refund. The IRS wants to make it as easy as possible for anyone who paid the tax to get this special refund. If you paid the tax and haven’t filed yet, here are some tips to help you figure the refund correctly and get it quickly:

* File electronically. Electronic-filing software flags often overlooked tax breaks and helps you figure them accurately and report them properly. If you use a professional tax preparer, ask that person to e-file your return.

* E-file for free. If your income is $52,000 or less, use the IRS' Free File program to connect to a private-sector company offering free e-file services.

* Choose direct deposit. Whether you file electronically or on paper, you can get your refund at least a week sooner by having it deposited directly into your checking or savings account.

* Consider using the standard-refund amount for the telephone-tax refund. Though using the standard amount is optional, it is easy to figure and approximates the eligible amount for most individual taxpayers. You only have to fill out one line on your return, and you don’t need to present proof to the IRS. The standard amount, ranging from $30 to $60, is based on the number of exemptions you can claim on your return.

* If you paid more than the standard amount, you may figure your refund using the actual amount of tax shown on your phone bills and other records. Base your refund request on the three-percent federal tax paid, not the total phone bill. Do not count tax paid on local-only service. You must have the phone bills or other records adequate to support the amount you are requesting. These documents should not be sent along with the refund request but should be retained in case the IRS questions the amount requested.

* Do not file duplicate requests. If you file a regular income-tax return, do not file Form 1040EZ-T. Designed exclusively for requesting the telephone-tax refund, this simple form is for people who don’t need to file a regular income-tax return. If you want to take advantage of the earned income tax credit for low and moderate income workers, the child tax credit or other tax breaks, file a regular return and include your telephone-tax refund request on that return.

* Stay away from tax preparers who falsely claim that many, if not most, phone customers can get hundreds of dollars or more back under this program.

Labels: IRS, telecom

posted by Consumer Help Web Editorial Team at 7:28 AM | 0 comments
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  Taxpayers Get Two More Days in 2007!

The Internal Revenue Service has announced that the traditional April 15 tax deadline date has been extended for two days until April 17.

The move has ample precedence. April 15, 2007 falls on a Sunday, and taxes are not due on Sundays partially because the U.S. Postal Service is closed. Monday, April 16, is Emancipation Day in the District of Columbia. Despite still not having full voting representation in Congress, the hundreds of thousands of District residents managed to buy the entire country another day's worth of interest...or at least more time to prep their paperwork.

Labels: IRS, tax deadline

posted by Consumer Help Web Editorial Team at 7:39 AM | 0 comments
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