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Orange County Tax Law Blog

Swatted: When it doesn’t refer to bugs

The extended holiday weekend kicks off summer, but IRS phone scam artists don’t take a break. The simple warning is this: never argue with them and hang up right away. You need to know that IRS agents do not initiate contact with you over the phone.

Now for that title – “swatted” is when someone calls in a make-believe major crime to 911 that requires a SWAT response. In the Dallas-area, this happened to a family after they had been targeted by someone impersonating an IRS agent who had called them from a 1-800 number.

Impersonation scam targets international taxpayers

For criminals seeking sensitive identity information, posing as the IRS – whether on the phone or in letters and emails – has been a successful tacit. Their targets change as quickly as the IRS warns of the latest scheme, however.

This current one goes after non-resident aliens and international taxpayers. The scam involves a request to authenticate information by completing a fake version of Form W-8BEN. Here is what the real form looks like.

Understanding your right to a tax appeal

If you are like countless other Americans, you may not realize that you have a legal right to appeal a decision of or tax assessment by the Internal Revenue Service. In fact, the ability to appeal an IRS decision in an independent forum is one of the fundamental provisions of the Taxpayer Bill of Rights, a collection of 10 privileges afforded taxpayers, including the rights to:

  1. Be informed
  2. Receive quality service
  3. Challenge the IRS’s opinion
  4. File an appeal to an independent forum
  5. Receive finality
  6. Pay no more than the proper amount of tax assessed
  7. Have legal representation
  8. Keep proceedings private
  9. Maintain confidentiality

10. Participate in a fair and just taxation system

IRS Automatic Substitute for Return (ASFR) Program

The ASFR Program targets individual taxpayers with apparent significant tax liability who have not filed income tax returns. This program allows the IRS to assess a tax bill based on 3rd party reporting (1099s or other documents) if a taxpayer does not file a tax return.

Last year, the Treasury Inspector General for Tax Administration (TIGTA) evaluated the effectiveness of the program on nonfiler compliance and enforcement yield. The program focus moved to “Refund Hold” cases, but overall collections have declined.

Why are tax liens being removed from credit reports?

A Consumer Financial Protection Bureau (CFPB) study found that incorrect information on credit reports was a top consumer complaint. To fix this, the bureau implemented new rules.

Only tax liens with certain identifying information – consumer’s name, address and date of birth and/or Social Security number – can be included. Many, if not most, liens did not have this information. The practical effect was that the largest three credit reporting companies began removing tax lien data last summer (reportedly about 50 percent). In mid-April, they removed the remainder from consumer credit reports.

From paying a tax bill to correcting a tax return error

Did you miss the tax return filing deadline of April 18? Do you still need to make a payment of request an installment agreement? Are you worried about a possible error?

With computer glitches that caused headaches last week, the IRS provided an extra day to file a return and pay your tax bill. If you still need to file your return, try to do so within 60 days. After that the minimum penalty is $210 or 100 percent of the unpaid tax, whichever is less. You might, however, be able to qualify for a waiver of this penalty if you had a good reason for filing late.

Filing deadline extended as IRS resolves computer issues

Last minute tax filers suffered a shock when trying to file their tax returns or pay taxes on the due date of April 17. Many users received an error message of “unavailable” from the IRS website. 

After a hardware error caused a computer breakdown on the tax filing deadline, the agency offered a penalty-free extension. Taxpayers do not need to do anything to get the extra day. You now have until midnight Wednesday April 18, to file and pay or ask for a six-month filing extension.

Tax Day 2018 filing and a warning about ghost preparers

Today, is the last day to file your tax return or request an extension to avoid a late filing penalty. And no matter how close you are to the wire – if your envelope is postmarked April 17, the IRS will consider your return on time.

If mailing in a return and payment, upgrade to registered mail. This ensures you have documentation that you sent the return. And if you are heading to the post office yourself, make sure you are mailing your return to the correct address (IRS, P.O. Box 7704, San Francisco, CA 94120-7704 for Californians making payments).

Reducing your risk of an IRS audit

Federal tax returns for the 2017 tax year are due next week on April 17. While it is tax time right now, an IRS audit can happen any time throughout the year. Still, there are steps you can take to lessen the risk of facing an audit

Why does the IRS choose certain taxpayers to audit? 

IRS audit rates continues to decline

The U.S. Census Bureau population clock estimates that there are more than 327 million Americans. At a net gain of one person every 14 seconds, our population continues to grow.

This generally translates to more tax returns – since 2010, the number has increased five percent. The IRS budget however has absorbed cuts or remained flat over than same time frame. In fiscal 2017, the Service audited 1.1 million returns (or .5 percent of those filed).