Tax reforms and the 35-day government shutdown multiplied problems for an already overburdened IRS. The agency had to deal with massive workload in preparing new tax forms and educating taxpayers with the tax changes post tax reforms. But that is only the tip of the iceberg. The IRS has been struggling with tax scammers who…
The IRS has been coping with the aftermath of budget cuts and government shutdowns, which has greatly reduced its ability to conduct audits, respond to taxpayer queries, and curtail fraudulent returns scams. This could potentially change in the coming years. The U.S. government could raise more than $1 trillion in additional taxes over the next…
It’s not an uncommon tax practice for multinational companies to open subsidiaries in low-tax countries to avoid paying higher taxes in the United States. Facebook has got into trouble with the IRS for exactly that. The IRS claims that Facebook used its Irish subsidiary to avoid paying taxes at the higher tax rate in the…
Phishing is the number one tax scam on IRS’ ‘Dirty Dozen’. Using fake emails or websites, scammers try to steal personal and financial information of taxpayers. With this stolen information, they file a fraudulent tax return to receive a refund, or conduct financial crimes. To avoid falling into the trap of scammers, it’s important to…
Most taxpayers dread an IRS audit. They picture an IRS agent at their doorstep, ready with a penalty or prosecution, but that isn’t the case. In most tax cases, the IRS does not conduct a field audit; instead, they use mail to communicate with the taxpayer. In fiscal year 2018, the IRS conducted 74.8% audits…
Preparing your tax return is a good time to consider any changes you might need to make in your tax planning. Every time we pay taxes, we notice small lapses such as disorganized receipts, unclear investment planning, and so forth which makes filing a lot more stressful, and it also has an impact on our…
With the coronavirus pandemic and the tax filing season going on, the IRS has to once again manage more with less. The coming months will become even more challenging for the IRS if recession sets in. How does a recession impact taxes? It has been observed that during recessions, the tax gap increases, which means…
The Earned Income Tax Credit (EITC) is one of the major tax credits designed for low and moderate-income groups. About 25 million eligible workers and families received about $63 billion in EITC nationwide as of December 2019. The average amount of EITC received was about $2,476. With the tax season on, this a good time…
The IRS and the Treasury in a notice announced an extension of time to pay federal income tax for taxpayers who have been adversely affected by the COVID-19 emergency. The due date for payment of tax has been extended from April 15, 2020, to July 15, 2020. Individuals can defer up to $1 million, and…
Some people misinterpret the law, but some go a little further and make up fictional laws. They contest the IRS using these frivolous arguments and even go to court. The result of using fictional legal bases can only be disastrous. Using such arguments before the courts can not only hurt your case, but even lead…
