The Taxman Blog
Less chance of the IRS coming to knock on your door? Sounds like a good thing, right?
President Trump has proposed a $239-million cut to the Internal Revenue Service’s budget. This could mean, among other things, reduced personnel for performing enforcement functions such as auditing taxpayers. This seems like cause for celebration to many. On the other hand, is reduced government funding good for all of us? Some things to consider:
- The IRS is a top producer for the government, bringing in $300 for every $1 it spends, points out the DC Report. With the current administration’s stated goal to run the government in a more “businesslike” fashion, this seems like a counterproductive move–Reporter Vic Simon calls it “as un-businesslike as you can get” to cut down resources that contribute to revenue.
- A decrease in enforcement might result in fewer audits of law-abiding taxpayers, but it will also result in less collection of tax legitimately owed, funds the government needs to fight the increasing deficit, and it will increase the burden on those who do pay their taxes.
- It’s a safe bet that one of the first things to go will be taxpayer services. The IRS is already severely understaffed, with a decrease in personnel of “almost 30% over the last number of years,” Treasury Secretary Steven Mnuchin told the LA Times. “While taxpayers waited an average of 10.8 minutes when they called the IRS seven years ago, that wait had grown to nearly 17 minutes in 2014,” TIME says. Alan Rappeport of the New York Times adds, “Last year, it took nearly 20 minutes to navigate a maze of automation and hold times to reach someone.” Sound familiar?
- Security might also become an issue. With cyber-threats on the rise, the IRS needs the resources to keep taxpayers’ information protected, points out Rappeport.
Perhaps some taxpayers can breathe easier, knowing that their filing errors or accidental over-deductions are unlikely to be examined closely anytime soon. However, a major budget cut to the IRS will have consequences that reach far beyond a little tax fudging.
What do you think? Is this good news or bad news? Feel free to let me know what you think, and of course, reach out to me anytime if you need help making sure that the IRS’ eye won’t fall on you!
Did your summer just get a little less refreshing? If you’re a soda sipper, that may be the case. On June 5, the Seattle City Council approved a tax on soda, energy drinks, and other sugary beverages (though diet drinks get a pass). The tax will take effect in early July at a rate of 1.75 cents per ounce, which will add approximately $1.18 to the cost of a 2-liter bottle of soda, says the Seattle Times. The vote passed 7-to-1 and will be the eighth such tax to pass in the U.S., after cities including San Francisco, Boulder, and Philadelphia. A similar proposal was rejected in Santa Fe, New Mexico, last month.
Proponents of the tax included “public health advocates and community groups,” according to CBS News. “They say it would cut down on the consumption of sugary drinks that have little nutritional value and are linked to .”
Businesses and labor groups were against the measure, citing the negative impact on small business and jobs. “Other critics called it regressive, saying it would affect low-income consumers the most,” reports CBS.
Revenue from the tax is intended to go toward “programs that promote access to healthy food and help address education disparities between white and minority students.”
If your beverages of choice are sports drinks, sweetened iced teas, or fruit drinks, you also have price increases in your future–those are also included in the products to be taxed.
The Trump Administration is proposing a huge overhaul of the way Americans pay taxes. If successful, items on the new tax bill would have far-reaching repercussions for taxpayers and the government alike, cutting down an estimated $9.5 trillion over its first decade in taxes paid and in Federal revenue.
Some highlights from the proposed tax plan, according to the Tax Policy Center:
- Tax brackets would be cut down from the current seven brackets, starting at 10% and ending at 39.6%, to just three, at 12%, 25%, and 33%
- The standard deduction would be increased from the current $12,700 to $30,000
- Personal & dependent exemptions would be repealed
- Mortgage interest, charitable, and itemized deductions would be capped at $200,000
- The top corporate tax rate would be reduced from 35% to 15%
The Tax Policy Center has also released the below chart for a side-by-side comparison of the current tax laws, Trump’s proposed tax plan, and the House Republicans’ proposals, with the last being more moderate in the changes proposed than Trump’s plan.
Will the tax bill come through Congress in 2017? It’s unclear yet when these changes will take effect. Wondering what you can do in anticipation for these possible changes? Ask the Taxman what preparing for the next few years looks like for you.
Last May, I posted that the IRS would be getting ready to revoke or deny passports to individuals with delinquent tax debt. Now, as of February 6, 2017, “IRC § 7345 authorizes the IRS to certify that to the State Department. The department generally will not issue or renew a passport to you after receiving certification from the IRS,” according to the IRS Website.
For the IRS to certify you as “seriously delinquent,” your tax debt must meet or exceed $50,000–including interest and penalties–and notice of lien must have been filed, or a levy been issued.
There are some circumstances that escape the “seriously delinquent” categorization, such as those under an installment plan, Offer in Compromise, or suspended collection. For a full list of qualifying circumstances, see the IRS’ guidelines.
Don’t get your passport revoked! If you think you might be in trouble, don’t hesitate to email me or call me at (206) 323-1066!
Why use artificial intelligence over genuine intelligence? Call the taxman! (206) 323-1066
Sometimes the IRS is just too cryptic even for me. Check out this letter I received, below, saying that the IRS couldn’t find a tax return–then take a look at the filing date. I’d have a hard time finding it too! (Click letter to enlarge.)
Then there’s this next letter, which came with a Social, but no name. I receive hundreds of IRS letters a week. No name, no credit!
Got a cryptic letter of your own? I can help. Send me an email or give me a call at (206) 323-1066.
From NPR comes an update on the scam that defrauded “at least 15,000 people of more than $300 million.”
Earlier this month, 70 people in India were arrested for participating in a fraud scheme that involved calling American taxpayers, informing them that they owed large amounts of money, and threatening them with legal action or arrest if they did not pay immediately.
Now 61 people have been charged by the U.S. Department of Justice, according to Camila Domonoske of NPR. Charges include “conspiracy to commit identity theft, false personation of an officer of the United States, wire fraud and money laundering.”
Always get a second opinion if you receive alarming information about your taxes. You can contact me at any time if you feel uneasy–trust your instincts; don’t get scammed!
Read the full story here!
In a previous post, I warned people about one of many tax-related scams, in which callers pretending to be from the IRS demanded payment for debt owed. Taxpayers were threatened with lawsuits and arrest if they did not comply. (The IRS will NOT call you with this type of information–they will always send mail.)
Yesterday, U.S. News reported that police in Mumbai, India have arrested 70 people involved in a massive phone scam to defraud Americans under the guise of being IRS callers. The scam had been running for approximately a year, netting the perpetrators over $150,000 a day, Mumbai police officer Parag Marere told U.S. News.
There may be perpetrators still at large, but police are questioning over 600 people in addition to the 70 already taken into custody to determine who will be charged. “The criminal charges filed against the suspects include extortion, impersonation and violations of India’s information technology laws.”
Last Friday I was a guest on Mike Adams’ radio show, “About Money,” aired on Business Radio 1300, KKOL. I spoke about my background and experience with the IRS, and informed the listeners on:
- Which tax returns are likely to be audited
- How the IRS “scores” your tax return for audit
- What to do if you receive a notice from the IRS
- Important things to keep in mind when facing an audit
- Identity theft
The spot is just over 13 minutes – about as long as it takes you to eat your lunch or take a coffee break. Give it a listen:
Most importantly, if you’re experiencing any of these, contact me right away. As I mention on the segment – just like you wouldn’t want to go to court without a lawyer, you don’t want to face the IRS without representation. Call your taxman at (206) 323-1066 or send me an email at email@example.com.
“The government has been trying to figure out how small-business owners can be persuaded to report their earnings more accurately. More audits may not be the answer.” – Taxman Client
Most taxpayers dread the word “audit.” Small-business owners can be especially hard-pressed to provide effective documentation, leaving them vulnerable to such audits. And yet, the New York Times discovered, it may not be as effective as a deterrent to tax evasion as the IRS would hope.
“The agency estimates that it collects $458 billion a year less in taxes from all Americans than the Government is actually due,” writes Stacy Cowley. This probably isn’t news to most of us. However, it may surprise you to find out that “those suspected of tax dodging tend to cluster in certain geographic areas.”
This may make it a little easier for the IRS to target taxpayers for audit. But “for those who dodge their taxes and get caught, the sting seems to fade fast. In the years right after an audit, taxpayers who had to make additional payments appeared to become a bit more compliant, but the effect diminished over time and disappeared entirely by Year 5, another study found.”
What do you think? Is the threat of an audit sufficient to keep you on your toes? Have you ever been audited? If you’re facing an audit right now, let me know— even people who didn’t end up owing anything, like Rebeca Mojica, “estimates that she spent $500 in accounting fees and 15 hours of her and her staff’s time dealing with her 2011 audit. The process lasted seven months.”
Read the full New York Times article here.