Monthly Archives: June 2011

IRS Announces New Effort to Help Struggling Taxpayers Get a Fresh Start

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Installment Agreements and Small Businesses

The IRS will make streamlined Installment Agreements available to more small businesses. The payment program will raise the dollar limit to allow additional small businesses to participate.

Small businesses with $25,000 or less in unpaid tax can participate. Currently, only small businesses with under $10,000 in liabilities can participate. Small businesses will have 24 months to pay.

In-Business Trust Fund Express Installment Agreements

Small businesses who currently have employees can qualify for an In-Business Trust Fund Express Installment Agreement (IBTF-Express IA). These installment agreements generally do not require a financial statement or financial verification as part of the application process.

The criteria to qualify for an IBTF-Express IA are:

  • You owe $25,000 or less at the time the agreement is established. If you owe more than $25,000, you may pay down the liability before entering into the agreement in order to qualify.
  • The debt must be full paid within 24-months or prior to the Collection Statute Expiration Date (CSED), whichever is earlier.
  • You must enroll in a Direct Debit installment agreement (DDIA) if the amount you owe is between $10,000 and $25,000.
  • You must be compliant with all filing and payment requirements.

To Request an In-Business Trust Fund Express Installment Agreement:

Reminder: Report Certain Foreign Bank and Financial Accounts to Treasury by June 30

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WASHINGTON — The Internal Revenue Service today reminds everyone who has a bank or other financial account in a foreign country, or who has signature authority over such an account, that they may be required to report the account to the U.S. Department of the Treasury by June 30 each year.

Many people in the U.S. have foreign financial accounts. While there is nothing improper about setting up or maintaining such accounts, many people may mistakenly believe their accounts are not large enough on a combined basis to trigger reporting obligations. Foreign account owners may have to report their accounts to the government, even if the accounts do not generate any taxable income.

U.S. persons are required to file a Report of Foreign Bank and Financial Accounts (FBAR), Treasury Department Form TD F 90-22.1, each year if they have a financial interest in or signature authority over financial accounts, including bank, securities or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year.

For 2010, the due date for filing the FBAR is Thursday, June 30, 2011, though some financial professionals will have until June 30, 2012 to file. Unlike with federal income tax returns, requests for an extension of time to file an FBAR cannot be granted.

The FBAR is not an income tax return and should not be mailed with any income tax returns. It is due by June 30 of the year following the calendar year in which the aggregate value of the foreign accounts, on any one day, exceeds $10,000. But for 20009 and earlier years, the due date is generally Nov. 1, 2011 for individuals whose filing deadline was properly deferred under Notice 2009-62 or Notice 2010-23, and have no financial interest in a foreign financial account but with signature or other authority over that account.

FBARs are filed with the U.S. Department of the Treasury, P.O. Box 32621, Detroit, Mich. 48232-0621.

Civil and criminal penalties for non-compliance with the FBAR filing requirements are significant. Civil penalties for a non-willful violation can range up to $10,000 per violation. Civil penalties for a willful violation can range up to the greater of $100,000 or 50 percent of the amount in the account at the time of the violation. Criminal penalties for violating the FBAR requirements while also violating certain other laws can range up to a $500,000 fine or 10 years imprisonment or both. Civil and criminal penalties may be imposed together.

If you learn you were required to file FBARs for earlier years, you should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late. No penalty will be asserted if IRS determines that the late filings were due to reasonable cause. Keep copies, for your records, of what you send. If, however, you have any unreported taxable income related to the foreign accounts, you should instead follow the procedures for making a voluntary disclosure to IRS under the 2011 Offshore Voluntary Disclosure Initiative.

The address for delivery of an FBAR by a method other than U.S. mail is: U.S. Department of the Treasury, Currency Transaction Reporting, 985 Michigan Avenue, Detroit, Mich., 48226.

The FBAR form is not available for electronic filing, but many income tax software packages can prepare a printed copy. FBAR forms and instructions are also available on IRS.gov or the Financial Crimes Enforcement Network website, FinCEN.gov, and by calling 1-800-829-3676.

Taxpayers who need assistance completing Form TD F 90-22.1 can contact the IRS by telephone at 1-800-800-2877, option 2, or via email at FBARquestions@irs.gov.

Protect your personal information! The IRS does not initiate taxpayer communications through email

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Email scams, also known as phishing, are on the rise. Whether they claim to be a widow in desperate need of transferring money from Nigeria to the United States for a “commission” or the IRS claiming that your tax return was not accepted or you have a large refund waiting, they are all used for one purpose- to steal your identity.

The emails are designed to prey on your emotions and, while most of us are very aware of the potential fraud, these scams succeed in costing billions of dollars in damage.  Every taxpayer hopes to receive a refund and dreads any form of admonishment from the government which is why the IRS email scams are so prevalent.  Please read the excerpt taken from IRS.gov and protect yourself from identity theft.

What is phishing?
Phishing is a scam typically carried out by unsolicited e-mail and/or websites that pose as legitimate sites and lure unsuspecting victims to provide personal and financial information.

All unsolicited e-mail claiming to be from either the IRS or any other IRS-related components such as EFTPS, should be reported to phishing@irs.gov.

Report IRS-related phishing incidents to the Federal Trade Commission through their Complaint Assistant.

What to do if you receive a suspicious IRS-related communication

If

Then
You receive an e-mail claiming to be from the IRS that contains a request for personal information …
  1. Do not reply.
  2. Do not open any attachments.Attachments may contain malicious code that will infect your computer.
  3. Do not click on any links.
    If you clicked on links in a suspicious e-mail or phishing website and entered confidential information, visit our identity protectionpage.
  4. Forward the e-mail as-is, to us at phishing@irs.gov.
  5. After you forward the e-mail and/or header information to us, delete the original e-mail message you received.
You discover a website on the Internet that claims to be the IRS but you suspect it is bogus … … send the URL of the suspicious site to phishing@irs.gov. Please add in the subject line of the e-mail, ‘Suspicious website’.
You receive a phone call or paper letter via mail from an individual claiming to be the IRS but you suspect they are not an IRS employee … Phone call:

  1. Ask for a call back number and employee badge number.
  2. Contact the IRSto determine if the caller is an IRS employee with a legitimate need to contact you.
  3. If you determine the person calling you is an IRS employee with a legitimate need to contact you, call them back.

Letter or notice via paper mail:

  1. Contact the IRS to determine if the mail is a legitimate IRS letter.
  2. If it is a legitimate IRS letter, reply if needed.

If caller or party that sent the paper letter is not legitimate, contact the Treasury Inspector General for Tax Administration at 1.800.366.4484.
You receive an unsolicited e-mail or fax, involving a stock, share purchase or claiming to be from the IRS … Or you receive a Form W-8BEN from an unknown source … … and you are a U.S. citizen located in the United States or its territories or a U.S. citizen living abroad.

  1. Complete the appropriate complaint form with the U.S. Securities and Exchange Commission.
  2. Forward e-mail to phishing@irs.gov.
    Please add in the subject line of the e-mail, ’Stock’.
  3. If you are a victim of monetary or identity theft, you may submit a complaint through the FTC Complaint Assistant.  

… and you are not a U.S. citizen and reside outside the United States.

  1. Complete the appropriate complaint form with the U.S. Securities and Exchange Commission.
  2. Contact your securities regulator and file a complaint.
  3. Forward e-mail to phishing@irs.gov.
    Please add in the subject line of the e-mail, ’Stock’.
  4. If you are a victim of monetary or identity theft, you may report your complaint to econsumer.gov.
You receive an unsolicited fax claiming to be from the IRS, requesting personal information … Contact the IRS to determine if the fax is from the IRS.

  • If you learn the fax is not from the IRS, please send us the information via e-mail at phishing@irs.gov. In the subject line of the e-mail, please type the word ‘FAX’.
You have a tax-related question … Note: Do not submit tax-related questions to phishing@irs.gov. If you have a tax-related question, unrelated to phishing or identity theft, please contact the IRS.

How to identify phishing e-mail scams claiming to be from the IRS and bogus IRS websites

Remember, the IRS does not initiate e-mail communication with taxpayers regarding EFTPS or tax account matters.

The IRS does not …

… request detailed personal information through e-mail.
… send any communication requesting your PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.

 

 

 

What to do if you receive a suspicious e-mail message that does not claim to be from the IRS

 If

 Then
You receive a suspicious phishing e-mail not claiming to be from the IRS … Forward the e-mail as-is to reportphishing@antiphishing.org.
You receive an e-mail you suspect contains malicious code or a malicious attachment and you HAVE clicked on the link or downloaded the attachment … Visit OnGuardOnline.gov to learn what to do if you suspect you have malware on your computer.
You receive an e-mail you suspect contains malicious code or a malicious attachment and you HAVE NOT clicked on the link or downloaded the attachment … Forward the e-mail to your Internet Service Provider’s abuse department and/or to spam@uce.gov.

 

IRS Increases Mileage Rate to 55.5 Cents per Mile

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WASHINGTON — The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

“This year’s increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices,” said IRS Commissioner Doug Shulman. “We are taking this step so the reimbursement rate will be fair to taxpayers.”

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

What To Keep When Buying a House or Refinancing

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Ever wonder what to do with those horribly thick piles of papers you get when you buy a house?  Or when you refinance the mortgage?  Well, here are the things to keep track of:

First a description of the necessities:  

The purchase escrow settlement statement usually has columns of numbers showing the price of the house and the various fees for the privilege of buying said property.  The whole document is usually 2-3 legal sized pages.

The loan agreement describes the terms of the loan – the amount borrowed, the interest rate, amount of each monthly principal & interest payment, whether it’s a fixed or variable loan and the name of the lender.  Sometimes the lender will also provide an amortization table that shows the enormous cost of paying for the house.

  1. All the FINAL documents they give you at close of escrow for purchasing the house.  This includes your FINAL escrow settlement statement, loan agreement with the lender(s), a variety of reports, disclosures, etc.  You will keep these documents until 4 years after you sell the property.
  2. For the most current refinance of the mortgage keep the FINAL escrow settlement statement and a copy of the loan agreement and all the accompanying documents provided at the disbursement of funds.
  3. If you’ve had multiple refi’s be sure to keep the escrow settlement statements and loan agreements for each and every one of them.  Keep these until the last mortgage paid and you have a bonfire celebrating the now free-and-clear house.

Each time you refi your property you can get rid all EXCEPT the docs listed in #3 above and refer to item #2 above for the new mortgage.

In all instances you can discard the documents identified as temporary.  The words “Good Faith Estimate”, “Estimated”, “Preliminary” or “Non-Final” are what’s typically used specify that the papers are not the real deal.   Keep only the FINAL statement.