Tag Archives: IRS

Oh, No! I Owe!

An overwhelming majority of taxpayers get a refund when they file their returns; they’ve made IRS an interest-free loan throughout the year and IRS is repaying that loan. Sometimes, however, you’ve played W-4 roulette – or you’ve failed to pay estimated quarterly taxes — and lost. You wanted that bigger paycheck or more money in the bank and now you owe. What to do?

Obviously, the best way to deal with owing tax – is not to. As a service to our clients, we will calculate your federal and state withholding for you at no charge. If you’d rather do it yourself, here’s a handy tool that will assist you. IRS Withholding Calculator. We’ll also estimate any quarterlies you might need to pay and provide payment vouchers for you.

But in the event you do owe the government, don’t worry. We’ll help you resolve it as painlessly as possible.

PAY THE BILL

— When you get a bill, pay it. The sooner you full pay the balance, the fewer the penalties and interest. In some cases, borrowing to pay off the debt could be less expensive. If you pay in cash, walk it in to an IRS office and be sure to get a receipt. If you pay by mail, send it certified and keep the return receipt. You can also pay online directly from your bank account or by using a debit or a credit card. To use your debit or credit card, the company will charge you a fee, but that fee could be much smaller than what IRS charges to set up a payment arrangement. Here is the link to pay IRS on line: IRS Online Payments

PAY ELECTRONICALLY

You can also pay via the Electronic Federal Tax Payment System (EFTPS). If you regularly make payments, setting up an EFTPS account is a good idea. Visit EFTPS to set up and use the system. You can also pay by phone using EFTPS by calling 800-555-4477.

SHORT-TERM PAYMENT PLAN

You can apply for a short-term payment arrangement if you can full pay the debt in 120 days or less. Call IRS at the phone number listed on your bill; if you can’t find the number, call 800-829-1040; they will direct you. IRS generally doesn’t charge a fee for a short-term payment arrangement. If you want to avoid IRS’ long hold times, just bring your notice to us. We’ll get a few pieces of information and make the arrangements for you.

SIMPLIFIED INSTALLMENT AGREEMENT

If none of the above will work for you, consider making an installment agreement. If you owe less than $50,000, we can arrange a payment plan over a maximum of 72 months without providing IRS a financial statement. While this repayment period will result in the lowest payment, we strongly encourage you to pay the balance off as soon as possible, as penalties and interest will continue to accrue until the debt is paid off. If you agree to pay via direct debit, IRS will generally refrain from filing a lien against your property.

There is a one-time user fee associated with requesting an installment agreement. IRS will charge $105, unless you agree to direct debit, in which case, the fee is reduced to $53 ($43, if your income is below a certain level).

STANDARD INSTALLMENT AGREEMENT

So, what if you owe IRS more than $50,000 or you need longer than 72 months to pay? Then we’ll request an installment agreement (Form 9465 Installment Agreement Request) for you and we’ll submit a financial statement (Form 433F, Collection Information Statement). The same user fees apply.

OFFER IN COMPROMISE

In the event you owe more than you foresee being able to pay within the collection statute (10 years), we should consider an Offer in Compromise. An OIC allows you to settle your tax debt for less than the full amount. This is one of the areas in which we specialize. Unlike the myriad other companies who advertise this service, we don’t take your retainer unless we determine you will qualify for an adequate settlement. Settlements are generally based on your assets and your income; we sometimes have to turn applicants away. Our average settlement is five cents on the dollar.

IRS’ Fresh Start Initiative makes it much easier for individual taxpayers and small businesses to pay their back taxes and avoid liens and levies. Give us a call and let us see how it can help you.

Many of these resolution methods are available when you owe your state, as well. The terms and repayment periods will vary. Just give us a call and we’ll be happy to help you work things out.

Did Someone Say Molasses in January? Where’s My Refund?

No, hell won’t freeze over, but it’ll get pretty chilly. Refunds will be much slower in 2016, but they’ll get here…eventually.

Last year’s income tax season was marked by an explosion of refund theft. Will this year be any different?
Increased protections may cut down on fraud but will likely draw out the wait for your money. Changes will be visible when you use tax preparation firms and filing software, with warnings akin to those from your bank if you try to log in from a new device or change account information. Less visible will be broader changes, such as revamped fraud-sniffing programs used by the IRS, states, and the tax prep industry, as well as new information-sharing agreements among all three.

Whether these measures will make it appreciably harder for someone to use your identity to claim your refund isn’t clear. One of the best consumer defenses against refund fraud is to file as early as possible, starting Jan. 19, beating would-be thieves who depend on your procrastination. But the best defense is to set your deductions ahead of time so that you get no refund at all.

Here’s what taxpayers can expect this season:

More Identity Verification

Yes, this means wider use of those multiple-choice questions about where you lived 30 years ago if you’re filing electronically. It also means “a lot more reactive warnings to users that something has been changed, and making sure it was them that changed it,” said JoAnn Kintzel, chief executive of Tax Act, a tax software firm. “If an e-mail address changes, a message will go both to the new e-mail and the old e-mail.”

Taxpayers will also get a notice if bank deposit information or their home address is changed, said Julie Miller, a spokesperson for tax software company TurboTax, and companies will check to see if more than one account is using the same Social Security number.

Leading tax prep and software companies, as well as payroll and tax financial payment processors, working with states and the IRS, have all agreed to a set of minimum security measures. Companies and states may put in place additional measures, as Alabama did this year, requiring anyone filing electronically in that state to provide information from a driver’s license or state ID card.

Stronger Passwords

Though complex passwords are commonplace on other consumer and bank websites, the tax industry has finally joined the club. The passwords must now include a lowercase letter, an uppercase letter, a symbol, and a number (for example, ‪#‎H8This‬). A new timed lockout feature will kick in after repeated failed login attempts.

The IRS launched a consumer education and awareness campaign this past November about security basics. They include not using the same password for multiple accounts, using anti-virus protection, and encrypting sensitive data.

Looser Refund Timing

There will be less certainty about when taxpayers can expect state refund checks, said Verenda Smith, deputy director of the Federation of Tax Administrators. “In the past, there was a political imperative to get refunds out the door, and that has certainly changed,” she said. “You may have a perfectly fine return, but the state will take just a little longer to confirm that it’s you who is filing it.”

More Paper Checks

There may also be more refunds that come in paper checks, even for those who request direct deposit. That may prove particularly true for first-time filers, said Smith.

Last year, many fraudsters changed a taxpayer’s preferences in favor of direct deposit to a prepaid debit card account created before filing the false return. So this year, Utah will directly deposit a refund only into a bank account or prepaid debit card issued by a taxpayer’s financial institution. Alabama also changed its policy so that its Department of Revenue can send paper checks to your mailbox even if a taxpayer requested direct deposit, which will be done on a case-by-case basis.

“Prepaid cards are the currency of criminals,” IRS Commissioner John Koskinen told 60 Minutes in 2014. “Our problem is you can’t distinguish the number of a prepaid card from a legitimate bank account.”

SUZANNE WOOLEY
BLOOMBERG
01/08/16