IRS Notice

IRS targets tool reimbursement plans that recharacterize wages

February 8, 2008 | Mike Habib, EA

IRS targets tool reimbursement plans that recharacterize wages
Employee Tool & Equipment Alert

on IRS’s website https://www.irs.gov/businesses/article/0,,id=178028,00.html

IRS has established a cross divisional team to address significant concerns with employee tool and equipment plans that purport to be valid accountable plans. Taxpayers that are considering implementing these plans, which are widely marketed to various industries, including the automotive, heavy equipment, construction, aircraft maintenance, agriculture, and other industries, are cautioned to be wary of them.

Foreign nationals, non US citizens with IRS filings, dealing, or tax problems facing non US citizens and foreign national

February 8, 2008 | Mike Habib, EA

Changes made to Form 1042-S (Foreign Person’s U.S. Source Income Subject to Withholding)

Mike Habib, EA

The IRS has made some changes to the electronic/magnetic media filing procedures for 2007 Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, and also released the 2008 version of the form. Form 1042-S is filed by withholding agents to report amounts paid to foreign persons (including persons presumed to be foreign) that are subject to U.S. withholding, even if: (1) no amount is deducted and withheld from the payment because of a treaty or Internal Revenue Code exception to taxation, or (2) the amount withheld was repaid to the payee. Amounts subject to reporting include, but are not limited to, the following U.S.-source items: (i) compensation for independent or dependent personal services performed in the U.S., (ii) compensation for personal services performed in the U.S. by students, teachers, and researchers, and (iii) amounts paid to foreign students, trainees, teachers, or researchers as scholarship or fellowship income, except that amounts exempt under IRC §117 are not subject to reporting. An item that is required to be reported on Forms W-2 or 1099 should not be reported on Form 1042-S.

Is the IRS knocking on your door? Don’t let them in!!

February 1, 2008 | Mike Habib, EA

How to handle the IRS at your Front Door? Is a Revenue Officer or a Revenue Agent visiting you soon?

If you find yourself face to face with an IRS Agent (Revenue Officer for collection issues, or Revenue Agent for audit and examination issues), at your front door you must remember to avoid these common mistakes:

1. Don’t invite them into your home or business.
2. Don’t answer any question. No matter how innocent they sound.
3. Don’t provide them paperwork or documentation.

Taxpayer Advocate’s Annual Report to Congress highlights compliance problems & suggests improvements

January 30, 2008 | Mike Habib, EA

Taxpayer Advocate’s Annual Report to Congress highlights compliance problems & suggests improvements

The National Taxpayer Advocate has released its 2007 Annual Report to Congress. It’s a voluminous study of the most serious problems facing taxpayers and IRS, along with suggested improvements. These problems include late-year Code changes by Congress, nonreporting of income in the cash economy, and lack of clear IRS guidance to taxpayers on the tax consequence of cancellation of debt.

https://www.irs.gov/advocate/article/0,,id=177301,00.html

IRS tax audit and IRS tax problems facing transportation or construction businesses, and other similar industries

January 25, 2008 | Mike Habib, EA

IRS tax audit and IRS tax problems facing transportation or construction businesses, and other similar industries

IRS SBSE-04-0108-003, 1/14/08

The IRS has reissued interim guidance that provides audit guidelines to its examiners reviewing excess per diem payments. The original guidance expired in November 2007.

IRS tax audit, IRS tax examination, IRS audit reconsideration, IRS appeal

January 18, 2008 | Mike Habib, EA

IRS tax audit, IRS tax examination, IRS audit reconsideration, IRS appeal

Are you asking yourself … If I have tax problems who should I contact?

Fiscal Year 2007 Enforcement and Service Results
As reported in a statement issued by IRS, it has continued to make strong progress in a number of key enforcement areas. IRS enforcement efforts increased in fiscal year 2007: overall, enforcement revenue reached $59.2 billion, up from $48.7 billion in 2006.

The IRS has a check for you!

January 17, 2008 | Mike Habib, EA

What’s New: IRS has $110 million in undeliverable refunds

Are you still waiting for your tax refund? If so, you may be one of the 115,478 taxpayers to whom the IRS has been unable to deliver a refund check. The refunds total about $110 million.

Every year there are taxpayers who don’t update the IRS or the U.S. Postal Service when they move or change their mailing address. Checks are mailed to the last known address for taxpayers, and when the address isn’t current, the checks are returned as undeliverable.

List of expiring tax provisions

January 8, 2008 | Mike Habib, EA

I thought you might find this list of tax provisions expiring 12/31/07 helpful as you do year-end tax planning.

TAX PROVISIONS EXPIRING 12/31/07

* Deduction of up to $2,000 or $4,000 (depending on income) for college tuition.

IRS releases 2008 tax figures

January 8, 2008 | Mike Habib, EA

As you prepare for the upcoming tax year, I thought you might find this brief rundown of 2008 tax changes useful.

* ADOPTION TAX CREDIT increases to $11,650 for adoption of an eligible child.

* SECTION 179 maximum deduction increases to $128,000. Phase-out threshold increases to $510,000.

Staying off the IRS Radar Screen

November 11, 2007 | Mike Habib, EA

Nothing strikes terror in the heart of American taxpayers quite like finding a letter in the mailbox from the IRS! In an effort to help you avoid that unpleasant scenario, provided below are examples of some common pitfalls to avoid if you don’t want the IRS lining up to be your new pen pal.

It’s surprising how many people mail their returns to the IRS without a signature. Before mailing, be sure to recheck everything and don’t forget to sign your return. An even better solution is to file electronically. Returns filed electronically have safeguards and controls to eliminate common errors. Additionally, the return goes directly to the processing center and the information does not have to be keyed into a computer by an IRS employee, which could result in additional errors.

Did you remember to include all income on the return? If you received a Form 1099 from anyone, be sure this income is on the return in the right place or you will receive a notice. Even if you did not receive a 1099 for work done independently, you are required to report the income. IRS receives copies of 1099s from banks, stock brokerage firms, rental agencies, and subcontractors and these are checked against income reported.