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IRS Special Edition Tax Tip 2013-10: Summer Job Tax Information for Students
Posted on May 17, 2013 by Stacie Clifford Kitts
IR-2013-51: IRS To Be Closed May 24, Four Other Days Due to Budget and Sequester; Filing and Payment Deadlines Unchanged
Posted on May 15, 2013 by Stacie Clifford Kitts
IR-2013-50: IRS Criminal Investigation Issues Fiscal 2012 Report
Posted on May 10, 2013 by Stacie Clifford Kitts
WASHINGTON — IRS Criminal Investigation (CI) today released its Annual Report for fiscal 2012, highlighting strong gains in enforcement actions and penalties imposed on convicted tax criminals.
The 28-page report summarizes a wide variety of IRS CI activity on a range of tax related issues during the year ending Sept. 30, 2012. CI investigates potential criminal violations of the Internal Revenue Code and related financial crimes in a manner to foster confidence in the tax system and compliance with the law.
“The key to our successes is perseverance and dedication to working complex financial investigations aimed at stopping tax fraud, identity theft, offshore tax evasion, public corruption, money laundering and other financial crimes,” said Richard Weber, Chief of Criminal Investigation.
Highlights of the report include:
Investigations initiated and prosecution recommendations were both up nearly 9 percent in fiscal 2012 compared to the prior year. Filings of indictments and other charging documents rose 13 percent. Meanwhile, convictions and those sentenced both gained roughly 12 percent from the prior year.
Criminal investigation initiations totaled 5,125 cases in fiscal 2012 while investigations completed were 4,937 – up 5 percent from fiscal 2011. Convictions totaled 2,634 in fiscal 2012 while the conviction rate edged up slightly to 93 percent.
“This annual report showcases some of the many significant cases that were completed by CI during fiscal year 2012 and the many program areas we cover as an organization. These cases are just a few examples of the thousands of investigations initiated by CI last year, as we continue to make our mark as the finest financial investigators in the world,” Weber said.
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IR-2013-49: Many Tax-Exempt Organizations Must File with IRS By May 15 to Preserve Tax-Exempt Status
Posted on May 10, 2013 by Stacie Clifford Kitts
WASHINGTON — A key deadline of May 15 is facing many tax-exempt organizations that are required by law to file annual reports with the Internal Revenue Service. Organizations will see their federal tax exemptions automatically revoked if they have not filed reports for three consecutive years.
The Pension Protection Act of 2006 mandates that most tax-exempt organizations file annual Form 990-series informational returns or notices with the IRS. Under this law, organizations that fail to file reports for three consecutive years automatically lose their federal tax-exempt status. The law, which went into effect at the beginning of 2007, also imposed a new annual filing requirement on small organizations. Churches and church-related organizations are not required to file annual reports.
Form 990-series information returns and notices are due on the 15th day of the fifth month after an organization’s fiscal year ends. Organizations that need additional time to file may obtain an extension.
Many organizations use the calendar year as their fiscal year, which makes May 15 the deadline for them. Organizations that fail to file annual reports for three consecutive years will see their tax exemptions automatically revoked as of the due date of the third required filing.
Small tax-exempt organizations with average annual receipts of $50,000 or less may file an electronic notice called a Form 990-N (e-Postcard), which asks organizations for a few basic pieces of information. Tax-exempt organizations with average annual receipts above $50,000 must file a Form 990 or 990-EZ, depending on their receipts and assets. Private foundations file a Form 990-PF.
The IRS began to publish the names of organizations identified as having automatically lost their tax-exempt status for failing to file annual reports for three consecutive years. Organizations that have had their exemptions automatically revoked and wish to have that status reinstated must file an application for exemption and pay the appropriate user fee.
The IRS offers an online search tool, Exempt Organizations Select Check, to help users more easily find key information about the federal tax status and filings of certain tax-exempt organizations, including whether organizations have had their federal tax exemptions automatically revoked.
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IR-2013-48: IRS, Australia and United Kingdom Engaged in Cooperative Effort to Combat Offshore Tax Evasion
Posted on May 9, 2013 by Stacie Clifford Kitts
WASHINGTON — The tax administrations from the United States, Australia and the United Kingdom announced today a plan to share tax information involving a multitude of trusts and companies holding assets on behalf of residents in jurisdictions throughout the world.
The three nations have each acquired a substantial amount of data revealing extensive use of such entities organized in a number of jurisdictions including Singapore, the British Virgin Islands, Cayman Islands and the Cook Islands. The data contains both the identities of the individual owners of these entities, as well as the advisors who assisted in establishing the entity structure.
The IRS, Australian Tax Office and HM Revenue & Customs have been working together to analyze this data and have uncovered information that may be relevant to tax administrations of other jurisdictions. Thus, they have developed a plan for sharing the data, as well as their preliminary analysis, if requested by those other tax administrations.
“This is part of a wider effort by the IRS and other tax administrations to pursue international tax evasion,” said IRS Acting Commissioner Steven T. Miller. “Our cooperative work with the United Kingdom and Australia reflects a bigger goal of leaving no safe haven for people trying to illegally evade taxes.”
There is nothing illegal about holding assets through offshore entities; however, such offshore arrangements are often used to avoid or evade tax liabilities on income represented by the principal or on the income generated by the underlying assets. In addition, advisors may be subject to civil penalties or criminal prosecution for promoting such arrangements as a means to avoid or evade tax liability or circumvent information reporting requirements.
It is expected that this multilateral cooperation and coordinated effort will allow many countries to efficiently process this information and effectively enforce any laws that may have been broken. Increasingly, tax administrations are working together in this way to assist one another in identifying non-compliance with the tax laws.
U.S. taxpayers holding assets through offshore entities are encouraged to review their tax obligations with respect to these holdings, seek professional advice if necessary, and to participate in the IRS Offshore Voluntary Disclosure Program where appropriate. Failure to do so may result in significant penalties and possibly criminal prosecution.
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IR-2013-47: Grant, Kay Named to IRS Leadership Posts
Posted on May 8, 2013 by Stacie Clifford Kitts
WASHINGTON — The Internal Revenue Service today announced the selection of Joseph H. Grant as commissioner of the Tax Exempt and Government Entities Division and Sheldon Kay as Chief of Appeals.
“Joseph and Shelly are strong leaders who will provide strong leadership and continuity in these critical parts of the IRS,” said Steven T. Miller, Acting IRS Commissioner.
Grant has served as the TE/GE Deputy Director since 2007. As TE/GE Commissioner, Grant will oversee the administration of tax law relating to employee plans, tax-exempt organizations and various government entities. TE/GE serves approximately 3 million organizations.
Grant originally joined the IRS in August 2005 as director of the Employee Plans Rulings & Agreements division. Before that, he was Chief Operating Officer and a Deputy Executive Director of the Pension Benefit Guaranty Corporation (PBGC). Grant also served on the staff of the Oversight and Social Security subcommittees of the House Ways and Means Committee.
In Appeals, Kay will serve as the Chief after serving as the Deputy Chief of Appeals since his return to the IRS in May 2011.
Kay was formerly a member of the Sutherland’s Tax Practice Group, focusing on tax controversy issues, including IRS procedures, dispute resolutions and tax litigation matters. He also served as the IRS District Counsel for the Georgia District where he was the primary legal representative for the District Director, the Director of the Atlanta Service Center, and the Chiefs of Appeals, Collection, Criminal Investigation and Examination Divisions.
The mission of the IRS Appeals organization is to resolve tax controversies, without litigation, on a basis which is fair and impartial to both the government and the taxpayer. Appeals handles and resolves more than 100,000 taxpayer cases a year.
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IR-2013-46: IRS Seeking Applications for Volunteer Tax Assistance Program Grants
Posted on May 7, 2013 by Stacie Clifford Kitts
WASHINGTON — The Internal Revenue Service is accepting applications for the Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) grant programs, which will allow some organizations to apply for annual funding for up to three years.
Applications will be accepted only through Grants.gov until May 31, 2013. Previous grant recipients will have the option to apply for up to three years of annual funding which would reduce the amount of paperwork they must complete over the three-year period. This annual funding will also help recipients with budget planning.
Application packages for TCE and VITA are available on Grants.gov. Interested organizations may obtain an electronic copy of the grant application package instructions, Publication 1101 for TCE and Publication 4671 for VITA on the IRS.gov website.
The TCE program was established in 1978 to provide tax counseling and return preparation to persons age 60 or older and to give training and technical assistance to the volunteers who provide free federal income tax assistance to seniors across the nation.
The VITA Grant program was established in 2007 to supplement the VITA program, which was created in 1969. VITA provides underserved communities with free federal income tax filing assistance. The grant program enables VITA to extend services to underserved populations in hard-to-reach urban and non-urban areas, to increase taxpayers’ ability to file returns electronically, to enhance training of volunteers and to improve the accuracy rate of returns prepared at VITA sites.
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IR-2013-45: IRS Seeks Applications for the Internal Revenue Service Advisory Council
Posted on May 1, 2013 by Stacie Clifford Kitts
WASHINGTON — The Internal Revenue Service announced it is accepting applications for the Internal Revenue Service Advisory Council (IRSAC). Applications will be accepted through June 14, 2013.
IRSAC’s purpose is to provide an organized public forum for IRS officials and representatives of the public to discuss relevant federal tax administration issues. IRSAC members submit a report to the IRS Commissioner annually at a public meeting in the fall.
IRSAC is comprised of up to 35 members, who are appointed to three-year terms by the Commissioner. Applications are currently being accepted for approximately 11 appointments that will begin in January 2014.
Nominations of qualified individuals may come from individuals or organizations. IRSAC members are drawn from substantially diverse backgrounds. Membership is balanced to include representation from the tax professional community, including but not limited to: tax attorneys, certified public accountants, enrolled agents, appraisers and the business community.
Federally registered lobbyists cannot be members of IRSAC.
Nominations should describe and document the proposed member’s qualification for IRSAC membership, including the applicant’s knowledge of Circular 230 regulations and the applicant’s past or current affiliations, as well as dealings with the particular tax segment or segments of the community that the applicant wishes to represent on the council.
More information, including application forms, are available on the Tax Professionals page on IRS.gov. Questions about the application process can be sent to the following e-mail address: publicliaison@irs.gov.
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IR-2013-44: IRS Releases Final Report on Tax-Exempt Colleges and Universities Compliance Project
Posted on April 25, 2013 by Stacie Clifford Kitts
WASHINGTON — The Internal Revenue Service today released its final report summarizing audit results from the IRS’ colleges and universities study, which began in 2008. This final report describes the agency’s multi-year project on a major segment of tax-exempt organizations.
“The audits identified some significant compliance issues at the colleges and universities examined,” said Lois Lerner, Director, Exempt Organizations division. “Because these issues may well be present elsewhere across the tax-exempt sector, all exempt organizations need to be aware of the importance of accurately reporting unrelated business income and providing appropriate executive compensation.”
The attached final report focuses on two primary areas within the examinations: reporting of unrelated business taxable income, and compensation, including, employment tax and retirement plan issues.
The interim report issued in 2010 focused on results from the questionnaires submitted by tax-exempt colleges and universities.
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IRS Tax Tip 2013-62: Tips to Start Planning Next Year’s Tax Return
Posted on April 24, 2013 by Stacie Clifford Kitts
For most taxpayers, the tax deadline has passed. But planning for next year can start now. The IRS reminds taxpayers that being organized and planning ahead can save time and money in 2014. Here are six things you can do now to make next April 15 easier.
- Adjust your withholding. Each year, millions of American workers have far more taxes withheld from their pay than is required. Now is a good time to review your withholding to make the taxes withheld from your pay closer to the taxes you’ll owe for this year. This is especially true if you normally get a large refund and you would like more money in your paycheck. If you owed tax when you filed, you may need to increase the federal income tax withheld from your wages. Use the IRS Withholding Calculator at IRS.gov to complete a new Form W-4, Employee’s Withholding Allowance Certificate.
- Store your return in a safe place. Put your 2012 tax return and supporting documents somewhere safe. If you need to refer to your return in the future, you’ll know where to find it. For example, you may need a copy of your return when applying for a home loan or financial aid. You can also use it as a helpful guide for next year’s return.
- Organize your records. Establish one location where everyone in your household can put tax-related records during the year. This will avoid a scramble for misplaced mileage logs or charity receipts come tax time.
- Shop for a tax professional. If you use a tax professional to help you with tax planning, start your search now. You’ll have more time when you’re not up against a deadline or anxious to receive your tax refund. Choose a tax professional wisely. You’re ultimately responsible for the accuracy of your own return regardless of who prepares it. Find tips for choosing a preparer at IRS.gov.
- Consider itemizing deductions. If you usually claim a standard deduction, you may be able to reduce your taxes if you itemize deductions instead. If your itemized deductions typically fall just below your standard deduction, you can ‘bundle’ your deductions. For example, an early or extra mortgage payment or property tax payment, or a planned donation to charity could equal some tax savings. See the Schedule A, Itemized Deductions, instructions for the list of items you can deduct. Planning an approach now that works best for you can pay off at tax time next year.
- Keep up with changes. Find out about tax law changes, helpful tips and IRS announcements all year by subscribing to IRS Tax Tips through IRS.gov or IRS2Go, the mobile app from the IRS. The IRS issues tips regularly during the summer and tax filing season.
You can find forms and publications at IRS.gov or order them by calling 800-TAX-FORM (800-829-3676).
Additional IRS Resources:
- IRS Withholding Calculator tool
- Form W-4, Employee’s Withholding Allowance Certificate
- Publication 505, Tax Withholding and Estimated Tax
- Publication 552, Recordkeeping for Individuals
- Choosing a Tax Professional
- Schedule A, Itemized Deductions and instructions
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IRS Tax Tip 2013-61: IRS Offers Tips for Dealing with Notices
Posted on April 23, 2013 by Stacie Clifford Kitts
Each year, the IRS sends millions of letters and notices to taxpayers for a variety of reasons. Here are ten things you should know about IRS notices in case one shows up in your mailbox.
- Don’t panic. Many of these letters require a simple response.
- There are many reasons why the IRS sends correspondence. If you receive an IRS notice, it will typically cover a very specific issue about your account or tax return. Notices may require payment, notify you of changes to your account or ask you to provide more information.
- Each notice offers specific instructions on what you need to do to satisfy the inquiry.
- If you receive a notice advising you that the IRS has corrected your tax return, you should review the correspondence and compare it with the information on your return.
- If you agree with the correction to your account, then usually no reply is necessary unless a payment is due or the notice directs otherwise.
- If you do not agree with the correction the IRS made, it is important that you respond as requested. You should send a written explanation of why you disagree. Include any information and documents you want the IRS to consider with your response. Mail your reply with the bottom tear-off portion of the IRS letter to the address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.
- You should be able to resolve most notices that you receive without calling or visiting an IRS office. If you do have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the notice with you when you call. This will help the IRS answer your inquiry.
- Remember to keep copies of any notices you receive with your other income tax records.
- The IRS sends notices and letters by mail. The agency never contacts taxpayers about their tax account or tax return by email.
- For more information about IRS notices and bills, visit IRS.gov. Click on the link ‘Responding to a Notice’ at the bottom left of the home page. Also, see Publication 594, The IRS Collection Process. The publication is available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Additional IRS Resources:
- Responding to a Notice
- Publication 594, The IRS Collection Process
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IRS Tax Tips – Six Facts on Tax Refunds and Offsets
Posted on April 22, 2013 by Stacie Clifford Kitts
IRS Tax Tip 2013-58: Eight Facts on Late Filing and Late Payment Penalties
Posted on April 18, 2013 by Stacie Clifford Kitts
April 15 is the annual deadline for most people to file their federal income tax return and pay any taxes they owe. By law, the IRS may assess penalties to taxpayers for both failing to file a tax return and for failing to pay taxes they owe by the deadline.
Here are eight important points about penalties for filing or paying late.
1. A failure-to-file penalty may apply if you did not file by the tax filing deadline. A failure-to-pay penalty may apply if you did not pay all of the taxes you owe by the tax filing deadline.
2. The failure-to-file penalty is generally more than the failure-to-pay penalty. You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date. You can reduce additional interest and penalties by paying as much as you can with your tax return. You should explore other payment options such as getting a loan or making an installment agreement to make payments. The IRS will work with you.
3. The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes.
4. If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date.
5. If you timely requested an extension of time to file your individual income tax return and paid at least 90 percent of the taxes you owe with your request, you may not face a failure-to-pay penalty. However, you must pay any remaining balance by the extended due date.
6. If both the 5 percent failure-to-file penalty and the ½ percent failure-to-pay penalties apply in any month, the maximum penalty that you’ll pay for both is 5 percent.
7. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
8. You will not have to pay a late-filing or late-payment penalty if you can show reasonable cause for not filing or paying on time.
Note: The IRS recently announced special penalty relief to many taxpayers who requested an extension of time to file their 2012 federal income tax returns and some victims of the recent severe storms in parts of the South and Midwest. For details about these relief provisions, see IRS news releases IR-2013-31 and IR-2013-42. The IRS has also provided individual tax filing and payment extensions to those affected by the Boston explosions tragedy. See IR-2013-43 for more information.
Additional IRS Resources:
- Online Payment Agreement tool
- Electronic Payment Options Home Page
- Make a Payment – payment options
- Tax Topic 653 – IRS Notices and Bills, Penalties and Interest Charges
- Q&A about interest and penalties for filing and paying late
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