Got IRS Debt? Know When It’s Really The IRS Contacting You.
From time to time the IRS issues consumer warnings on the fraudulent use of the IRS name or logo by scammers trying to gain access to taxpayers’ financial information in order to steal their identity and assets so everyone should know how the IRS contacts taxpayers.
Suspicious e-Mail/Phishing
When identity theft takes place over the Internet, it is called phishing. Phishing (as in “fishing for information” and “hooking” victims) is a scam where Internet fraudsters send e-mail messages to trick unsuspecting victims into revealing personal and financial information that can be used to steal the victims’ identity. Current scams include phony e-mails which claim to come from the IRS and which lure the victims into the scam by telling them that they are due a tax refund.
Key Facts About How The IRS Communicates With Taxpayers:
- The IRS does not normally initiate contact with taxpayers by email.
- The IRS does not send text messages or contact people through social media.
- When the IRS needs to contact a taxpayer, the first contact is normally by letter delivered by the U.S. Postal Service. Fraudsters will send fake documents through the mail, and in some cases will claim they already notified a taxpayer by U.S. mail.
- Depending on the situation, IRS employees may first call or visit with a taxpayer. In most instances, the IRS sends a letter or written notice to a taxpayer in advance.
- IRS revenue agents or tax compliance officers may call a taxpayer or tax professional after mailing a notice to confirm an appointment or to discuss items for a scheduled audit.
- IRS has contracted with selected private debt collectors who can call taxpayers for the collection of certain outstanding inactive tax liabilities, but only after the taxpayer and their representative have received written notice.
- IRS revenue officers and agents routinely make unannounced visits to a taxpayer’s home or place of business to discuss taxes owed, delinquent tax returns or a business falling behind on payroll tax deposits. IRS revenue officers will request payment of taxes owed by the taxpayer. However, taxpayers should remember that payment will never be requested to a source other than the U.S. Treasury.
- When visited by someone from the IRS, taxpayers should always ask for credentials. IRS representatives can always provide two forms of official credentials: a pocket commission and an IRS Personal Identity Verification Credential.
Contacting IRS To Report Fraudulent Scams
Taxpayers who receive the IRS phone scam or any IRS impersonation scam should report it to the Treasury Inspector General for Tax Administration at its IRS Impersonation Scam Reporting site and to the IRS by emailing phishing@irs.gov with the subject line “IRS Impersonation Scam.”
What You Should Do If You Really Do Have Tax Issues?
The tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), San Francisco Bay Area (including San Jose and Walnut Creek) and elsewhere in California know exactly what to say and how to handle issues with the IRS as well as State Tax Agencies. Our experience and expertise not only levels the playing field but also puts you in the driver’s seat as we take full control of resolving your tax problems.
What You Need To Know To Deduct Charitable Contributions On Your 2017 Income Tax Return
The more itemized deductions you can rack up on you individual income tax return, the smaller amount of taxable income you will have which now puts more money in your pocket. Taxpayers who gave money or goods to a charity should be able to claim charitable contributions which get included as an itemized deduction on their 2017 federal tax return.
For those taxpayers looking to make charitable contributions in 2018 for their 2018 taxes, the good news is that the 2017 Tax Cuts And Jobs Act made no changes to the deductibility of charitable contributions.
So whether it is for 2017 or future years, here are some important facts you need to know about claiming charitable contributions to save on taxes and withstand an IRS audit.
- Qualified Charity. Only donations to qualified charitable organizations are deductible. Do not merely rely on the organization’s website or what the organization may state. If you are questioning whether an organization is qualified, you can check with IRS directly through the IRS website. To check the status of a charity, use the IRS Select Check tool. Keep in mind that religious institutions including churches, synagogues, temples, and mosques are considered “de facto” charitable organizations and are eligible to receive deductible donations even if they are not on the IRS’ website. However, you can never deduct donations to political organizations and candidates. Also, you cannot deduct contributions to specific individuals no matter how deserving or sympathetic to their tragic situation.
- You Must Itemize. To deduct donations, you must include these donations as Itemized Deductions on Schedule A of Form 1040. If the total amount of your Itemized Deductions does not exceed the Standard Deduction already given to you by the Federal government, you won’t get any real benefit from making these donations.
- Deductible Portion Of Donation May Be Reduced. You can only deduct the amount of your donation that exceeds the fair market value of the benefit received. If you get something in return for your donation, you would have to reduce your deduction by the value you received. Examples of benefits include merchandise, meals and tickets to events.
- Property donation. If you give property instead of cash, you can normally only deduct the item’s fair market value. Fair market value is generally the price you would get for the property item on the open market. Donating property that has appreciated in value, like stock, can result in a double benefit. Not only can you deduct the fair market value of the property (so long as you have owned it for at least one year), you will avoid paying capital gains tax.
- Donations From Your Retirement Account. Typically, if you want to make a donation from your IRA, you’d have to withdraw those funds, pay the tax and then make the donation. However, IRA owners who are age 70½ or older can transfer up to $100,000 per year to an eligible charity tax-free and the transfer counts toward your required minimum distribution (RMD) for the year. To be an eligible transfer, funds must be transferred directly by the IRA trustee to the charity. Withdrawing the monies first and then writing the check to the charity will not qualify for the non-recognition of income.
- Form to File. You would file Form 8283 for all non-cash gifts totaling more than $500 for the year. Keep an itemized list of for donations of non-cash items – do not just state you gave a bag of clothes and expect to substantiate the value of what you gave. Instead be specific, noting the description and condition of the items. You can generally take a deduction for the fair market value of the item which is the price that a willing buyer would pay to a willing seller. If you contribute property worth more than $5,000, you must obtain a written appraisal of the property’s fair market value.
- Proof of Donation. If you donated cash or goods of $250 or more, you must have a written statement from the charity. The statement must show:
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- Amount of the donation.
- Description of any property given.
- Whether the donor received any goods or services in exchange for the gift.
For cash donations under $250, you should always have substantiation of payment by a bank record such as a canceled check or credit card receipt, clearly annotated with the name of the charity or in writing from the organization. Even with a statement from the charity, it is still a good idea to retain this evidence of payment.
- You Can’t Deduct The Value Of Your Time. While your time is valuable, when you volunteer your time for charities, the IRS does not allow a charitable deduction for the time you spent. However, most out of pocket expenses relating to volunteering are should be deductible so long as they are not reimbursed to you or considered personal. Out of pocket charitable expenses which might be deductible include parking fees and tolls; other travel expenses; uniforms or other related clothing worn as part of your charitable service; and supplies used in the performance of your services. You will need to keep receipts evidencing payment in case you are questioned by the IRS.
- Timing Of Contribution. Contributions are deductible in the year the contributions are made so for the 2017 tax year that would had to been no later than December 31, 2017. But that doesn’t necessarily mean that by the 31st the cash payment had to be made out of your account. Contributions made by text message are deductible in the year you send the text message if the contribution is charged to your telephone or wireless account. Contributions made by credit card charges are deductible in the year charged so long as the charge is posted by your credit card company in that tax year. The credit charge itself does not have to be paid off by the end of the tax year it was charged. Similarly, checks which are written and mailed by the end of the year will be deductible for the year written if they are not cashed until the following year. Announcing that you intend to donate assets will not qualify for a deduction in the current tax year until the tax year you make good on the pledge.
What Should You Do?
You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), San Diego County (Carlsbad) and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, unreported crypto currency transactions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.
The Door Is Closing – IRS To End Offshore Voluntary Disclosure Program.
Taxpayers with undisclosed foreign assets are urged to come forward before the Offshore Voluntary Disclosure Program (“OVDP”) closes September 28, 2018.
The IRS announced on March 13, 2018 that it will begin to ramp down the 2014 Offshore Voluntary Disclosure Program (“OVDP”) and close the program on September 28, 2018. In a statement made by Acting IRS Commissioner David Kautter, “Taxpayers have had several years to come into compliance with U.S. tax laws under this program. All along, we have been clear that we would close the program at the appropriate time, and we have reached that point. Those who still wish to come forward have time to do so.”
OVDP enables U.S. taxpayers to voluntarily resolve past non-compliance related to unreported foreign financial assets and failure to file foreign information returns. Since OVDP’s initial launch in 2009, more than 56,000 taxpayers have come forward to avoid criminal prosecution and secure lesser penalties than what the law provides. The IRS reports that through OVDP, they have collected $11.1 billion in back taxes, interest and penalties. The number of taxpayer disclosures under the OVDP peaked in 2011, when about 18,000 people came forward. The number steadily declined through the years, falling to only 600 disclosures in 2017. This decrease is not surprising given that many people have already come forward to secure the benefits of OVDP seeing the success of the implementation of the Foreign Account Tax Compliance Act (“FATCA”) and the ongoing efforts of the IRS and the Department of Justice to ensure compliance by those with U.S. tax obligations with respect to undisclosed foreign financial assets and unreported foreign income.
Tax Enforcement Continues
Stopping offshore tax noncompliance remains a top priority of the IRS. Don Fort, Chief, IRS Criminal Investigation stated that the IRS will continue ferreting out the identities of those with undisclosed foreign accounts with the use of information resources and increased data analytics. Since 2009, the IRS Criminal Investigation has indicted 1,545 taxpayers on criminal violations related to international activities, of which 671 taxpayers were indicted on international criminal tax violations.
Where a taxpayer does not come forward into OVDP and has now been targeted by IRS for failing to file FBAR’s, the IRS may now assert FBAR penalties that could be either non-willful or willful. Both types have varying upper limits, but no floor. The first type is the non-willful FBAR penalty. The maximum non-willful FBAR penalty is $10,000. The second type is the willful FBAR penalty. The maximum willful FBAR penalty is the greater of (a) $100,000 or (b) 50% of the total balance of the foreign account. In addition the IRS can pursue criminal charges with the willful FBAR penalty. The law defines that any person who willfully attempts in any manner to evade or defeat any tax under the Internal Revenue Code or the payment thereof is, in addition to other penalties provided by law, guilty of a felony and, upon conviction thereof, can be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than five years, or both, together with the costs of prosecution (Code Sec. 7201).
For the non-willful penalty, all the IRS has to show is that an FBAR was not filed. Whether the taxpayer knew or did not know about the filing of this form is irrelevant. The non-willful FBAR penalty is $10,000 per account, per year and so a taxpayer with multiple accounts over multiple years can end up with a huge penalty.
Streamlined Procedures and Other Options
A separate program, the Streamlined Filing Compliance Procedures, for taxpayers who might not have been aware of their filing obligations, has helped about 65,000 additional taxpayers come into compliance. The Streamlined Filing Compliance Procedures will remain in place and available to eligible taxpayers. Additionally, eligible taxpayers can qualify for relief under the Delinquent FBAR Submission Procedures or Delinquent International Information Return Submission Procedures.
What Should You Do?
Don’t let another deadline slip by! If you have never reported your foreign investments on your U.S. Tax Returns or even if you have already quietly disclosed you should seriously consider participating in the IRS’ 2014 Offshore Voluntary Disclosure Program (“OVDP”). Once the IRS contacts you, you cannot get into this program and would be subject to the maximum penalties (civil and criminal) under the tax law.
Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems, get you in compliance with your FBAR filing obligations, and minimize the chance of any criminal investigation or imposition of civil penalties. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), the San Francisco Bay Area (including San Jose and Walnut Creek) and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.
Your Right to Challenge the IRS’ Position and Be Heard
Taxpayers have the right to challenge the IRS’s position and be heard. This is one of ten of rights listed in the Taxpayer Bill of Rights, which clearly outlines the fundamental rights of every taxpayer.
The IRS Says That Taxpayers Have The Right To:
- Raise objections.
- Provide additional documentation in response to formal or proposed IRS actions.
- Expect the IRS to consider their objections timely.
- Have the IRS consider any supporting documentation promptly.
- Receive a response if the IRS does not agree with their position.
While the IRS contemplates these rights are in place to assure a fairly administered tax system, in reality that is hardly the case as many people coming to me have expressed their unresolved tax problems and how the IRS has not helped them or is treating them unfairly not giving proper credence to their situation.
When Is The Best Time to Bring In A Board Certified Tax Attorney To Resolve Your Tax Problems?
First and foremost, you need a tax lawyer if you have a dispute with the IRS or any State Tax Agency. Most tax disputes arise in the form of an audit of one or several past tax returns. If the IRS notifies you of an audit, you should hire a tax attorney immediately. Your tax lawyer can communicate with the IRS on your behalf, be present during your audit and help negotiate a settlement, if necessary. Having experienced legal counsel helps ensure that you don’t overpay as a result of your audit.
In some instances, taxpayers ignore letters and warnings from the IRS because they’re scared or don’t know how to respond. In those cases, the IRS may have no choice but to threaten you with criminal charges for tax evasion. If you learn that you’re the target of an IRS criminal investigation, you’ll want to hire a tax lawyer—and do it quickly.
Your tax lawyer can reassure the IRS that you’re taking its investigation seriously, work with the IRS in an effort to help you avoid criminal charges and represent you in court if you are charged with a tax crime.
Second, a tax lawyer’s help can also be invaluable if you’re facing a complicated legal tax situation. This might include instances where:
- You’re starting a new company and are trying to decide between the various ways to structure your company
- You’re the executor of an estate and need advice regarding whether and how much is owed in estate taxes
- You want to challenge the IRS on a tax decision or appeal an audit
- You receive a Collections Notice telling you that tax is due and/or threatening collection action
- You want to sue the IRS
- You think or know that you’ve committed tax fraud
Most people have tax problems because they did not plan how to do business, how to record transactions or how to account and substantiate their expenses or they have taken inappropriate or unjustified risky positions on their tax returns. Being proactive by engaging a tax lawyer to avoid having these problems in the first place would be wise to pursue. Additionally hiring tax counsel early on should assure that you do not blow any appeals or communicate something to the IRS that you later wished you never did.
Questions to Ask When Interviewing Tax Lawyer
At your initial meeting with a lawyer, you’ll want to share the specifics of your situation and then ask the lawyer about his or her experience handling similar matters. Know that lawyers are bound by strict confidentiality rules. Even if you end up hiring a different attorney, the lawyers you meet with cannot share the information they learned with the IRS or anyone else.
Some questions to consider asking your lawyer during your initial meeting:
- How long have you been practicing law?
- Do you just practice tax law, or do you also work in other areas of practice?
- What are your credentials as a tax specialist (such as Board Certified Tax Law Designation, LL.M.(Tax) Degree or C.P.A. License)?
- Have you previously handled tax situations similar to mine?
- What’s your assessment of my situation? What works for me and against me?
- If I hired you, what course of action would you recommend?
- Do you charge a flat fee or hourly rate, or do you use some other billing structure?
- Can you estimate my total legal fees?
What Should You Do?
If you have outstanding tax problems or liabilities with the IRS or any State Tax Agency, protect yourself and preserve your right to challenge the tax agency’s position and be heard. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), San Diego County (Carlsbad) and elsewhere in California are highly skilled in handling tax matters and can effectively represent you at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, unreported foreign income and unreported crypto-currency income.
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