Jun 182018

Douglas Tax Blog. U.S.A. IRS.GOV/NEWSROOM

Most people are unaware of the IRS withholding calculator. We are often asked the question, am I withholding enough from my taxes to cover what I will owe ?  This question comes up usually around tax filing season, but often throughout the tax year. Its important to understand that if you have a set paycheck, and are worried about whether you are withholding enough, then yes, its a good idea to check your withholding, usually at the beginning of the year. And since the tax laws have changed its probably a good idea for just about everyone to do this, because you need to recalculate your taxes anyway.

Its even more important for people with variable income, or those who are self employed to do this. If you are self employed, you need to not only keep track of your expenses, but you need to plan ahead of time, and that starts with determining, through the use of the IRS withholding calculator, whether you are holding enough back in taxes to pay Uncle Sam. If you don’t do this ahead of time, you may find yourself needing tax resolution work, due to poor planning.

When should this be done is another common question. The IRS always states that you should check your withholding early in the year to make sure you have enough tax withheld from your paycheck, or if your self employed, set the right amount aside to pay in your quarterly estimated tax payments. And with the Tax Cuts and Jobs Act, the new law increased the standard deduction, removed personal exemptions, increased child tax credits, limited and or discontinued certain deductions and changed certain tax rates. So it makes sense to try and figure out where you end up.  The IRS withholding calculator is designed to do just that.

One last thought, many people believe that the new tax law lowered tax rates for everyone, therefore its not necessary to do this. Wrong. We have found that some people’s taxes have actually gone up, it depends upon the individual situation. Don’t take chances, prepare ahead of time, so you don’t have to call a tax resolution company.

National Society of Tax Professionals

Jun 122018

Douglas Tax Blog. U.S.A. IR-127

The Internal Revenue Service has provided guidance for taxpayers and employers about changes from the tax law changes that impact, move related expenses, un-reimbursed employee expenses, and vehicle expenses. The tax law changes suspends the deduction for moving expenses for tax years beginning after December 31st, 2017, and through January first of 2026. Meaning you cannot deduct the use of an automobile as part of a move until after 2016.

The tax law changes itemized deductions that are limited to 2 percent of adjusted gross income. This change will impact an un-reimbursed employee for items like uniforms, union dues and the deduction of business related meals, entertainment and travel. The business standard mileage rate which was issued before the Tax Law, cannot be used to claim an itemized deduction for un-reimbursed employee travel expenses in taxable years after December 31st, 2017, and before January 1st, 2016.

The standard mileage rate for the use of a car, van, or pickup or panel truck for 2018 remain, 54.5 cents for every mile of business travel driven a 1 cent increase from 2017. 18 cents per mile driven for medical purposes, a 1 cent increase form 2017. 14 cents per mile driven in service of charitable organizations, which is set by statute and remains unchanged. The standard mileage rate for businesses is based on an annual study of the fixed and variable costs of operating an automobile.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. A taxpayer may not use the business standard mileage for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than 4 vehicles being used at the same time.

One of the fastest way that self employed individuals get into tax trouble, is not keeping tabs on expenses, especially mileage deductions, that can add up to thousands of dollars in write offs. Don’t put yourself in a position where you need tax resolution services, because of sloppy record keeping.

  •  06/12
Jun 022018

Douglas Tax Blog. U.S.A. IR-2018-125

The IRS warned tax professionals thru its state and industry Security Summit partners to beware of phishing emails posing as state accounting and professional associations. The IRS received reports from tax professionals who received fake emails that were trying to trick them into disclosing their email usernames and passwords. Cyber criminals specifically targeted tax professionals in Iowa, Illinois, New Jersey, and North Carolina. The IRS also received reports about a Canadian accounting association.

Any suspicious or obviously fake organizations, should be reported right away to the IRS. Tax professionals need to be alert to these type of scams, as they change over time, and reporting and educating each other is a great way to combat the crime. Tax professionals who are members of professional associations should go directly to those associations websites rather than open any links or attachments.  Tax practitioners who receive suspicious emails related to taxes or the IRS, or phishing attempts to gain access to practitioner databases, should forward those emails to phishing@irs.gov

Scams like this are reminders to the tax community to be on guard against cybercriminals who are adapting tactics, and scams to try to catch unsuspecting individuals off guard. Being aware of new scams as they develop is crucial to stopping this type of crime. The Security Summit partners recommend these steps. Learn to know phishing emails, and never open a direct link or any attachment from a suspicious email.

Go to publication 4557, Safeguarding Taxpayer Data, and Small Business Information Security, by the National Institute of Standards and Technology for additional information.  Install anti malware security software on your computer and set software to update automatically. Create passwords of at least 8 characters in length, then make sure to encrypt all sensitive files and emails and use strong passwords as well.

Make sure to clean or wipe old hard drives to destroy any data, including data on printers. Limit access to taxpayer data to individuals who need to know. Report any theft or data loss to the appropriate IRS Stakeholder Liason.


  •  06/02
May 292018

Douglas Tax Blog. U.S.A.

The IRS has issued a warning for summer tax scams, even though the tax filing season is just ending for most citizens and business owners. Being cautious and alert regarding new summer tax scams, and being prepared ahead of time is what the IRS is trying to accomplish by educating the public.

A new scam, called the EFTPS scam, which is linked to the the Electronic Tax Payment System, has been reported across the country where scammers call and ask for money immediately to satisfy a tax payment that is owed. Callers of this scam, pretend to be from the IRS and ask for money, stating that a Certified letter was sent and not responded to. They then threaten to person on the phone with jail, by telling them that the police are on the way, unless they make an immediate payment. This is one of the oldest summer tax scams.

The robo scam is a pre-recorded message, which the IRS never makes, asking for money, and making the same type of threats as the ETPS scam. These scammers are also now pretending to be from private debt collection agencies, as they know the IRS has recently begun to use private debt collection agencies. They threaten the same type of aggressive tactics as the other summer tax scams.

A newer summer tax scam is targeting people with limited english language skills. They are also sending these individual taxpayers phishing emails over the internet, and threatening them with deportation, unless they make a payment over the phone. Many of these individuals are unaware of how the U.S. tax system works and end up being victimized by aggressive, unethical criminals.

The signs that give away a phone scammer include, they always call to demand payment over the phone. The IRS will never call and ask for payment over the phone. The IRS always initiates contact by mail first. Scammers threaten to bring the police in right away, and the IRS does not do that. The IRS also does not threaten or have anything to do with deportation. They are a tax agency. The scammer will always ask for a credit or debit card, the IRS does not do that, ever.msnbc

  •  05/29
May 212018

Douglas Tax Blog. U.S.A.  IR-117

The IRS Security  Tax Scams program has warned tax professionals to increase their computer security and to beware of their inbox, especially the email scams that act as a friend and want them to click on a link, so they can download a virus onto their computer, to gain confidential information. The phishing scams target Social Security numbers of Tax Professionals, and can lead to identify theft and false tax returns.

Since this tax scam surfaced several years ago, the IRS has been educating the tax industry to take countermeasures, first by educating them on what is happening, and secondly by providing tools to share information when an attack does happen, so law enforcement can react to prosecute those perpetrating the crimes. The IRS security tax scams campaign, has led to convictions of a large number of criminal gangs, and individuals who have targeted the tax industry for personal Social Security numbers.

The effort is being led led by the Treasury Department, Internal Revenue Service, Tax Inspector General For Tax Administration, Federal Bureau of Investigation, U.S. Justice Department, and Attorney General’s of all 50 States. It is a large scale crackdown of the tax refund fraud that swept the United States over the several years, along with the identity theft crackdown. The tools available to both Federal and State agencies are being expanded, and more and more companies, and organizations are taking part, casting a wider net, to catch criminals at a faster pace.

The tax community and others with taxpayer data, including human resource departments, small businesses and others, are among those targeted with increasingly sophisticated phishing schemes. The Anti-Phishing Work Group, a not for profit industry focused on eliminating identity theft and fraud from phishing, reported seeing a significant increase in phishing activities in 2017 ans so far in the year 2018. As programs like the IRS security tax scams show, stopping phishing scams will require a large scale coordinated effort.

  •  05/21
May 202018

Douglas Tax Blog. U.S.A.

We started discussing the IRS using private debt companies back when George Bush Jr. was President. The Republican’s wanted to outsource government functions to private industry to cut costs, but ultimately the idea didn’t work out for some simple reasons. Now, many years later, forgetting the lessons of history, and especially why the idea didn’t work before, some of the very Republicans who tried it before, are trying to do it again. If history is any guide, we know what will happen, again.

Having taxpayers pay for IRS private debt companies may seem like a good idea, but two problems prevent the utilization of it from coming to fruition. First off, the taxpayer Bill Of Rights. Whenever a Tax Debt Collector goes after someone with a tax debt, they have to adhere to to the taxpayer Bill of Rights, but because the Private Debt Agencies are so aggressive, they simply don’t.

When President Clinton was in office, after the first attempt at Private IRS debt collectors, horror stories hit the media, regarding taxpayers who were run over by Private IRS debt companies, who forgot that they had to adhere to the Taxpayer Bill of Rights, were then taken to court by those very same taxpayers, and in the end, Congress decided that the litigation costs were not worth the time and effort spent.

The second problem with this whole idea, is that the IRS is a perfectly good collection agency, by itself, but has never been funded adequately. For every dollar put into the IRS for Collection, they are bringing in nearly five dollars. Not a bad return, but when you politicians who are philosophically opposed to funding any form of government at all, it becomes a sticky issue.  IRS private debt companies is a good idea, but politics can sometimes get in the way, of even good ideas.  Sounds like business as usual in Washington D.C., when IRS private debt companies that have failed in the past are given traction again, with no reform’s.

  •  05/20
May 152018

Douglas Tax Blog. U.S.A.

IRS Amnesty and Tax Evasion questions are posed to us now and then, along with both business owners and individuals looking for options for dealing with a tax debt. The first thing we usually need to know is, do you have any unfilled tax returns ?  Being in compliance (filling all required tax returns), is imperative if alternatives for dealing with a large tax debt are to be pursued.

When we find out that a person has not filled a large number of tax returns, we often advise them to file right away to avoid the possibility of any type of criminal action by the IRS. The general rule of thumb is that if you seek help, and or file prior to the IRS catching up with you, criminal action usually does not happen, because you are showing are showing a willingness to solve the problem.

We had a client with a huge home health care business in the State of Arizona. They had grown too fast, knew little about taxes, and by the time they realized what had happened, they had over a million in payroll tax debt. They contacted us and the next thing that happened was a call form the owner stating Treasury Department officials with sidearms were at the business wanting to now what they were up to. The difference between any criminal action seemed to be an email from the owner to us, asking for Tax Resolution Services.

When it comes to IRS Amnesty and Tax Evasion, we also get questions about offshore accounts. The IRS has been active for years now, going after anyone who has parked money offshore, in an attempt to avoid taxes. Over $10 billion has been collected in these efforts to date. The IRS Offshore Voluntary Disclosure Program started in 2009, and has been designed to allow individuals to come forward to get back into the tax system.

Even though the Voluntary Disclosure Program has substantial penalties, which have been going up for several years, as long as someone steps up prior to the IRS finding out about them, the general rule is that they will not be criminally convicted. Of course that determination is a lengthy process to determine IRS Amnesty, and yet some situations warrant criminal prosecution.

  •  05/15
May 132018

Douglas Tax Blog. U.S.A.

Is IRS has been preparing to use private debt collectors for some time now. Its been a long time since the IRS used private debt collectors, in fact you would have to go back to President George H.Bush’s time in office to see what happened when that occurred. Back then, Congress was clamoring for the private sector to take on the tasks of the IRS, and it ended up a mess.

When they tried to privatize tax collection under Bush Jr., many horror stories came out regarding abuse at the IRS. Once those stories took hold in the public realm, Congress held some hearings on the matter, and that was all she wrote. It was an experiment gone bad, and now nearly two decades later, they are at it again. History is often lost on past generations, but this is a tad less than 18 years ago !

The problem with private debt collectors is that they never recognize the Federally protected Taxpayer Bill of Rights. They step on those rights in an attempt to collect money, usually a few citizens file a lawsuit, then the process of private debt collectors get shelved and we go back to square one.  Why Congress cannot remember this failed experiment is beyond comprehension. It truly puzzles the imagination when one considers that the IRS is one of the few federal programs that returns a healthy dividend, as one dollar spent on the IRS generates roughly five dollars in revenue.

If Congress wanted to increase the Revenue of the Treasury Department, maybe they should ask the IRS and Treasury what they think, as both have suggested increased funding to appropriate levels. Instead, Congress has bowed to political pressure and decreased funding to the IRS for nearly two decades. The number of employees at the IRS has steadily dropped, even though technological improvements have taken the place of some of those people, the IRS needs to be funded properly.

Private debt collectors will only go back to the same tactics they used before, and you can expect litigation to follow, then the idea will eventually be shelved again. Maybe the second time around, Congress memory will become clearer.

  •  05/13
May 092018

Douglas Tax Blog. U.S.A. IR-2017-107

The Internal Revenue Service has warned people to beware of new irs summer phone scams linked to the Electronic Federal Tax Payment system or EFTPS for short, where fraudsters call to demand an immediate tax payment through a prepaid debit card. This scam is being reported across the country, so taxpayers should be alert to the details. Such fraud can lead to identity theft, to tax refund fraud, economic loss, or tax debts.

In the latest twist, the scammer claims to be from the IRS and tells the victim about two certified letters purportedly sent to the taxpayer in the mail but returned as undeliverable. The scam artist then threatens arrest if a payment is not made through a prepaid debit card. The scammer also tells the victim that the card is linked to the EFTPS system when, in fact, it is entirely controlled by the scammer. The victim is also warned not to contact their tax preparer, an attorney or their local IRS off, police until after the tax payment is made. This can lead to further tax debt or economic loss.

IRS summer phone scams are not new, but this is a new twist. EFTPS is an automated system for paying federal taxes, using the internet or by phone using the EFTPS voice system. It is offered by the U.S. Department of the Treasury and does not require the purchase of a prepaid debit card.  Since EFTPS is an automated system, taxpayers won’t receive a call from the IRS, and should be wary of anyone that in fact calls them. Remember, only scammers would in fact be calling you asking you for money.

The IRS will never call to demand immediate payment over the phone, or ask you for a debit or credit card over the phone. They will never ask for any type of payment over the phone by check, money order to cashiers check either. They will not threaten to bring in the police or other law enforcement  to question you about the amount you owe over the phone. If you think a scammer is calling in an irs summer phone scams after receiving such a call, call the Treasury Inspector General or TIGTA., or 1-800-366-4484. You don’t want to fall into one of these traps and end up with economic loss or a false tax debt.

  •  05/09
May 072018

Douglas Tax Blog. U.S.A.

We sometimes get a call regarding American Expatriates Taxes, whether the person is overseas, or visiting relatives back here in the United States. The common theme among all the expats is confusion about what they are required to do, and then frustration once they learn the rules of what is required by Uncle Sam of Expats, in filing taxes and the requirements about whether they will owe or not. Sometimes they end up with a debt, usually for failure to file any return at all, and sometimes they need tax relief  as a result.

Before making the decision, you need to know that if you leave, you may have to pay an exit tax. The tax is calculated by determining your assets and then figuring out what you could reasonably get for them if you sold them the day before you left the country. What you ow the IRS overall depends also upon the type of assets you have. If you have stocks or bonds,, the IRS can tax you up to 20% of those holdings. Other investments can be taxes up to the top tax bracket, which dropped after the Trump tax reform from 39.6% to the top rate of 37%.

Needing Tax Resolution because you failed to plan for such an exit can be avoided with some solid planning, but be advised and do it ahead of time. Most of the expats who call us failed to do just that, and that is why they are looking for Tax Resolution.

American Expatriates Taxes are complicated when it comes to estate and gift planning as well. Citizens of the United States are granted up to a five and a half million exclusion on taxes passed down in an estate. American Expatriate Taxes are rough in this area, as your relatives could face a forty percent tax on assets passed down in an estate. It is essential to plan ahead with a good financial planner so you can avoid needing Tax Resolution as a result of poor planning.


  •  05/07