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Boston Tax Law Blog

How does the government shutdown impact operations at the IRS?

Anyone that has recently called the Internal Revenue Service (IRS) for assistance with tax filings likely received an automated message. Due to the current, partial government shutdown, a message would state “live telephone assistance” from the IRS “is not available at this time” and likely will not return until the government reinstates full operations.

What happens in the IRS during the shutdown? Like other federal agencies, the IRS is operating on a reduced staff. Of the almost 80,000 employees who regularly report to work, approximately 9,950 are “excepted” from furlough. These individuals include those funded through advanced appropriations, those who perform tasks “necessary for the safety of human life or protection of government property,” and the short-term exception of those employees needed to bring about an orderly “closedown” of the office.

IRS warns taxpayers of potentially fraudulent tax preparers

It is the beginning of a new year. During the first few months of the year, many Massachusetts residents turn their attention to tax time and the need for assistance in preparing their returns. The IRS warns taxpayers that there are some people out there waiting to take advantage of individuals as they search for someone to provide much needed help. These fraudulent tax preparers could potentially wreak havoc on unsuspecting individuals' lives.

Considering the changes made to the tax laws that took effect for 2018 taxes, making sure that the best assistance possible is received becomes a priority. In order to make sure that an individual does not fall prey to an unscrupulous person, the IRS recommends taking certain steps to ensure that the tax preparer is legitimate. For instance, a Massachusetts resident could ask for a preparer's IRS Preparer Tax Identification Number, which paid preparers must obtain.

A charitable heart could spell trouble with the IRS at tax time

New laws went into effect for the 2018 tax year that affect the income tax filings of people here in Massachusetts and others across the country. If not fully understood, some of them could end up in trouble with the IRS. This even extends to those with giving hearts since certain charitable contributions may not be tax deductible depending on the circumstances.

When making donations, many here in Massachusetts and elsewhere count on the tax deduction they provide. Those deductions will more than likely not be possible under the 2017 Tax Cuts and Jobs Act for many people. That is, unless the person donating gives amounts that exceed the new standard deduction of $12,000 for a person filling as an individual or $24,000 for married couples filing jointly.

Is there more than one way to settle tax collection cases?

It just is not always possible for many Massachusetts residents to meet their financial obligations. Medical emergencies, job losses and other catastrophic events can quickly drain any monetary resources a family may have. Another event that can result in an adverse financial event is owing taxes. Fortunately, more than one way exists to deal with tax collection cases.

Massachusetts residents who owe taxes to the federal government may be able to deal with that debt without breaking the bank. The IRS understands that some people cannot pay their tax bills in one lump sum. It may be possible to enter into a partial payment installment agreement, an installment agreement for the full amount owed or an offer in compromise to satisfy the debt.

How IRS treatment of bitcoin could help at tax time

For some time, cryptocurrencies such as bitcoin were all the rage. People here in Massachusetts and elsewhere made a good deal of money on this new type of currency. For this reason, in 2014, the IRS announced these assets are to be taxed as capital gains when people make money from them.

In the last two years, the value of bitcoin, along with other cryptocurrencies, has declined. While this may not be good news for many people, it could provide those who have lost money in recent years with a silver lining. Since the IRS treats them as capital assets, any losses up to $3,000 can be claimed on income tax returns each year. The total loss may be spread out over several tax years.

Tax charges stem from Panama Papers disclosure

New York prosecutors brought charges for conspiracy and tax fraud against four men across the globe. One was a Massachusetts accountant arrested in Boston. Counts against him included wire fraud and willful failure to file a Report of Foreign Bank and Financial Accounts (FBAR).

These were the first U.S. indictments related to the leak of documents from Mossack Fonseca law offices in Panama (often called the Panama Papers). In London and Paris, arrests were made of an investment adviser and client, but an implicated Panamanian lawyer remains at large. German police also raided Deutsche Bank headquarters in Frankfurt on suspicion the bank helped launder money through offshore tax havens.

What's the deal with taxes and bankruptcy?

Many Massachusetts residents find themselves in dire financial circumstances due to IRS obligations. Whether they can pull themselves out of the situation depends on a variety of factors, and some will find that their best debt relief option involves much more than tightening up the budget or trying to work out a deal with creditors. In many cases, the best way to resolve the situation is to file bankruptcy. However, many people believe that taxes and bankruptcy just do not mix.

Fortunately, that is not always the case. In some instances, taxes may be discharged. Those eligible must meet five criteria. First, at least three years must have passed since the income tax return associated with the tax debt was due for filing.

IRS releases new information for 2019 income taxes

December is the time of year when many Massachusetts residents give their first thoughts to the coming tax season. While many are only thinking about their 2018 tax liabilities, the IRS is already releasing information about 2019. Having this information should help many people make better financial decisions for the coming year.

The information includes new income tax brackets for the 2019 tax year that include adjustments for inflation. The standard deductions will also see a slight increase. Single filers get a $200 increase, married couples filing jointly get a $400 increase, and heads of household get a $350 increase. This may not seem like much, but every dollar counts when taxpayers are doing their best not to pay any more in taxes than necessary.

Scam emails circulating purportedly from the IRS

Almost for as long as there have been computers, there have been scammers and hackers misusing them for nefarious purposes. That remains true to this day, with new scam tactics arising every day.

The IRS recently warned the public about a new development in a long-running and well-known scam. Fraudulent emails are now circulating purportedly providing tax transcripts from “IRS Online,” in an attempt to get private and corporate users to click on a link that will download notorious malware. The malware, known as Emotet, is particularly nasty and difficult to remove. It can take months to clear from an impacted business’ computer system. It only takes a single user opening a phishing email to download the malware.  

The timeframe for appeal of a denied offer in compromise

In a previous post, we discussed a denied offer in compromise filed by actor Wesley Snipes. He tried appealing, first to the IRS Office of Appeals and then to the Tax Court, but lost his appeals due to specific fact circumstances unique to his case. In this post, we’ll discuss the time frames for general appeals of denied offers in compromise.

Denied offers in compromise are appealable directly to the IRS Office of Appeals without having to go to the Tax Court. Appeals can take a long time, though, with many appeals taking a year or more to decide. The first question that springs to mind is usually this: why does it take so long?

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