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Entries in IRS (71)

Sunday
Mar032013

Non-Profit Urges Tax-filers to Save Tax Refund

iStockphoto/Thinkstock(NEW YORK) -- A non-profit group hopes to encourage tax filers to save a portion of their tax refund through a contest.

Doorways to Dreams (D2D) Fund is a non-profit group based in Allston, Mass. and founded by a former Harvard Business School professor, Peter Tufano. The group is awarding $25,000 to a grand prize winner and 40 weekly drawing prizes of $250 each to those over age 18 who use Form 8888 when they file their taxes with the IRS and put at least $50 in a savings vehicle. After participants file their taxes, they must also register at www.saveyourrefund.com by April 15 to enter the sweepstakes.

D2D, whose mission is to strengthen the financial security and opportunity of low- and moderate-income consumers, is using funding from Capital One Bank’s Investing for Good program, the Annie E. Casey foundation and other philanthropic sources for the contest.

Since the contest launched Feb. 1, Timothy Flacke, executive director of D2D, said it has received hundreds of entries.

“The reason we’re doing it is to shine a spotlight on this opportunity that savings represent,” Flacke said.

Because many middle- and low-income tax filers receive large tax refunds this time of year, “it’s the best time of year to try to save,” he said.

The sweepstakes’ website highlights the stories of a number of the weekly winners, some of whom say that until the contest, they had not heard of the little-known IRS program that allows you to invest your tax refund in a savings vehicle.

“We know a lot of people don’t understand an IRS infrastructure exists to have large refunds to an IRA, prepaid card and savings bond,” Flacke said. “The idea is to shine a spotlight on this and to bring an element of fun.”

President Obama announced the Tax Time Savings Bond plan in September 2009.

About 45,000 Americans have saved $11 million in U.S. savings bonds at tax time with a portion of their tax refund, with an average of $244 per family, according to D2D in 2011; and 73 percent of the 2011 users of the tax time savings bond policy had household incomes, or adjusted gross income, below $50,000.

Copyright 2013 ABC News Radio

Friday
Feb152013

IRS Urges Tax Filers to Stop Constantly Checking Status of Refunds

iStockphoto/Thinkstock(WASHINGTON) -- As soon as they file their taxes, the first question on most taxpayers' minds is: When will I get my refund?

To better answer this question, the Internal Revenue Service has a “Where's My Refund?” website.  Taxpayers can also check the status of their refund on the agency's smartphone app, IRS2go.

But the IRS says both platforms are getting bombarded with refund inquiries.

"The IRS alerted taxpayers and the tax community it is experiencing high traffic on 'Where's My Refund?' as more tax returns come in.  The heavy volume of refund inquiries means that the IRS anticipates both 'Where's My Refund?' on IRS.gov and the refund feature on the IRS2go phone app will have limited availability during busier periods," the agency said in a statement Thursday.

The IRS is urging taxpayers to check the status of their refunds only once per day, being that its systems are updated every 24 hours, usually overnight.

"To avoid system delays, the best time to check on refunds is evening and weekends," the agency recommends.

And there's no need to call the IRS if you have any concerns.

"The same information is available whether on the Internet, IRS2go smartphone app or on IRS toll-free lines," the IRS says.

Copyright 2013 ABC News Radio

Wednesday
Jan302013

Tax Filing Season Begins

iStockphoto/Thinkstock(NEW YORK) -- After being delayed by eight days because of Congress' debate over the so-called "fiscal cliff," the 2012 tax filing season has officially kicked off.  Taxpayers can begin filing electronically on Wednesday.

To make up for the lost time and get that refund check as soon as possible, expedite the process by getting all the necessary information ready.

"You need to gather all your income tax documents.  That's going to be your W2s, your 1099s, receipts for charitable contributions," says Kathy Pickering of H&R Block.

She says, "A great checklist is to look at your last year's return."

If you were hoping for a shortcut this year, you're out of luck.  Pickering says there haven't been many changes this year that could make filing easier.

The tax filing season was pushed back to Jan. 30 because Congress only this month passed legislation to address expired tax cuts.

Copyright 2013 ABC News Radio

Thursday
Jan242013

IRS Pushes Back Tax Filing Season Eight Days

iStockphoto/Thinkstock(NEW YORK) -- The IRS has delayed the start of this year's tax filing season by eight days.

The window for accepting 2012 tax returns will now open on Wednesday, meaning many early filers will get their refunds late.

"Early filers are all about my refund, 'I want my refund now,' so that's going to impact them negatively," says Bob Meighan of Turbo Tax.

He says the IRS' decision to delay the processing of all returns until Jan. 30 was the result of the late debate in Congress over the so-called "fiscal cliff."

So how long will it take to process electronic returns?

"The IRS is now giving guidance that it's going to be as long as 21 days, but that's to set the expectation of 21 days.  Normally, we find the processing is much quicker," Meighan says.

Copyright 2013 ABC News Radio

Friday
Dec282012

IRS Year-End Tax Saving Tips

iStockphoto/Thinkstock(NEW YORK) -- While the looming fiscal cliff makes America’s financial future uncertain, what is certain is that taxpayers will shell out more money to the government in 2013.

And while it’s impossible to determine exactly what type of increases taxpayers will see, there are still ways to help you save money in 2012.

To help you get started, ABC News spoke to Scott Cramer, a financial planner and president of Cramer & Rauchegger, and found some savings on IRS.gov to assist taxpayers.

Donate: You have five days to make a donation to a charitable organization for a tax deduction.  Check the IRS website for detailed information on charitable donations.

Fund a Retirement Plan: If you have a 401(k), try to max it out this year.  If your company does not offer a retirement plan, then you should consider Roth IRA or a traditional IRA.  You can donate to these up until the tax filing deadline in April.

Tax Harvesting: With tax rates expected to go up, consider selling some highly appreciated stock.  If you want to minimize your tax liabilities, sell some losers and some gainers, says Cramer.

Avoid a Wash Sale: Do not purchase the same stocks sold to minimize tax liabilities in the next 30 days because that's considered a wash sale, which means you will cancel out your sale.  You can find the rules on capital gains and losses on the IRS website.

Get Rid of Poor Performers: ”Capital gains taxes are going up and going away,” said Cramer.  With taxes on stock gains expected to increase from about 15 percent to 20 percent, take a look at all the stock you own and consider selling shares that are laggards.  “Your stock has to go up five percent just for you to break even, and there is expected to be a 3.8 tax levy on stock as of Jan. 1st.  You have to expect any stock you own to appreciate by 8 percent to break even,” said Cramer.

Close on a Home: If your home purchase is in the final stages, attempt to close by Dec. 31 to avoid an expected 3.8 percent tax.  See Realtor.org for scenarios on the expected 3.8 percent investment income tax, which does not apply to gains under $500,000.

Organize Receipts: Take some time to organize tax receipts before sitting down with your accountant or financial planner.  Do not forget distributions or rollovers from retirement funds.

Earned Income Tax Credit: If you earn under $45,068, then you may be eligible for a tax credit.  Check out the IRS website for details on eligibility.

Don’t Forget the Child Tax Credit:  Taxpayers may be able to reduce their federal income tax by up to $1,000 for each qualifying child under the age of 17.  Check out these 10 facts to determine if you meet the criteria for a tax credit.

Make Last-Minute Tuition Payments: The American Opportunity Tax Credit, which was created to help parents and students pay for college expenses, is expected to expire at the end of the year.  Check to see if you are eligible for the maximum $2,500 per student annual tax credit.

Last-Minute Energy-Efficiency Purchases: The federal government offers tax credits for homeowners who purchase energy-efficient products.  You can check online to determine what products are eligible for the tax credit.

Copyright 2012 ABC News Radio

Thursday
Dec202012

Fiscal Cliff Debate May Delay Tax Refunds in 2013

iStockphoto/Thinkstock(NEW YORK) -- If you depend on an early tax refund to help pay for large holiday credit card bills you could be out of luck.

The last-minute debate over the fiscal cliff may delay tax refunds in the new year.  The IRS is likely to be very busy dealing with changes in the tax code.

"There's a high possibility that the tax filing season could be further delayed," says Kathy Pickering, executive director of The Tax Institute at H&R Block.  "We're recommending that people be aware of that."

"Either if you need to modify your holiday spending or make arrangements to pay bills in February that you would otherwise pay in January," she says.

Copyright 2012 ABC News Radio

Monday
Dec032012

GAO Report: Alarming Rise in IRS Refund ID Thefts, Few Prosecuted

iStockphoto/Thinkstock(WASHINGTON) -- A new government report charts an alarming rise in tax return refund identity thefts and finds that few of the thefts are even investigated by the Internal Revenue Service (IRS).

The U.S. Government Accountability Office (GAO) report said the IRS identified 641,690 incidents of identity theft involving tax fraud this year as of Sept. 30.  That is an increase of 62 percent from the 232,142 incidents reported in 2011.

Just 0.1 percent of these cases initiated criminal investigations and the rest of the crooks were able to keep the ill-gotten gains.  Only 898 criminal investigations were initiated in fiscal 2012, the report said.

"Notwithstanding the IRS's efforts, its resources and ability to resolve cases are stretched thin," according to the Taxpayer Advocate Service's 2011 annual report to Congress.

Beth Tucker, IRS Deputy Commissioner for Operations Support, testified in front of the House Committee on Oversight Thursday, saying, "The IRS is working to speed up and further streamline identity theft case resolution so that innocent taxpayers will experience as little inconvenience as possible."

The dollar volume of fraudulent refunds is not known, according to the GAO.  Financial institutions recognized and returned to the IRS $754 million in tax refunds they found suspicious between January and Sept. 30, 2012.  The GAO said that figure is only a fraction of the total amount of refund fraud.

James White, a spokesman for the GAO, said the nearly 642,000 cases included many attempts by individuals or groups of criminals, but the IRS does not know how many individuals are responsible.

Thieves can obtain a taxpayer's name, and Social Security number in many ways, including hacking into a computer system or stealing paper files at one of the many organizations that use names and Social Security numbers in their records, including employers, schools and financial firms.  They then file a fraudulent tax return seeking a refund, often early in tax filing season before the real taxpayer files.

IRS officials said that "one of the challenges they face in combating this type of fraud is its changing nature and how it is concealed," the GAO report stated.

"While perfect knowledge about cases and who is committing the crime will never be attained, the better IRS understands the problem, the better it can respond and the better Congress can oversee IRS's efforts," the report continued.

The IRS has said it is pursuing ways to detect, resolve and prevent identity theft-based refund fraud, including a new filtering process that analyzes tax return characteristics.  On its website, the agency offers tips for those who believe their tax records have been affected by identity theft and how to prevent it:

  1. Don't carry your Social Security card or any documents with your SSN on it.
  2. Don't give a business your Social Security number just because it asks.
  3. Check your credit report every 12 months.
  4. Protect your personal computers by using firewalls, anti-spam/anti-virus software, update security patches, and change passwords for Internet accounts.
  5. Don't give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know whom you are dealing with.

Copyright 2012 ABC News Radio

Tuesday
Nov132012

SBA, IRS Helping Businesses Hurt by Sandy

Mario Tama/Getty Images(NEW YORK) -- Beleaguered businesses in and around New York City, still recovering from Hurricane Sandy, are beginning to get relief in the form of government loans and tax breaks.

In communities like Red Hook in Brooklyn, the storm surge affected enterprises big and small: The sprawling Fairway Market chain saw the ground floor of its Red Hook market -- located in a 19th Century brick warehouse -- destroyed by the same wall of water that flooded out the basement of tiny textile and stationery boutique Foxy & Winston a few blocks away.

At the Brooklyn Navy Yard Industrial Park, Dal LaMagna, CEO and president of IceStone USA, has applied for a Small Business Administration (SBA) loan of $1.9 million.  The company, which turns recycled glass into counter-tops, employs 39.  After years of losses, it was just starting to turn the corner into profitability when Sandy knocked it for a loop.

"Sandy slammed the door shut in our face," says LaMagna.  "Our inventory was completely submerged.  All our marketing materials were under water."

So, too, were 60 electric motors and 70 electrical outlets.  Five forklift trucks will have to be replaced.  His insurer, he says, told him he was out of luck because IceStone's coverage did not include coastal flooding.

"We can't afford to replace the equipment," he says.  "The only good news: We may get an SBA loan.  We applied for one immediately.  We wanted to make sure we were at the head of the line.  I can't imagine how many will apply."

And if he doesn't get it, "We're done," LaMagna says.  "We'll have to close.  My goal is to save 39 people's jobs."

Bill Sanford, CEO of Fairway, tells ABC News his Red Hook inventory is "a total loss."  Though Fairway was "very well insured" against a catastrophe, he does not rule out the possibility that the company may eventually seek assistance from the SBA, which is making loans of up to $2 million to companies struggling to get back on their feet.

Over at Foxy & Winston, owner and artist Jane Buck says, "Our basement is a mess."  Her losses include a box of children's T-shirts ($600), which she accidently dropped during the storm, only to see it swept away by floodwaters.  

Though business is slow, she's managed to reopen.  

"I'm one of the lucky ones," she tells ABC News.  It may take a month, she thinks, for neighboring businesses to be up and running again.

Buck says she's aware of the loans being offered by the SBA and is thinking of applying -- in her case, for $25,000.

"Part of me says the money ought to go to someone more in need than me," she says.  "But maybe three months from now I'll wish I'd borrowed.  The interest rate is just 1 percent.  Part of me thinks I should get in line."

Carol Chastang, press liaison for the SBA, says anyone can apply for these loans -- you don't have to be a small business owner, nor do you have to own a building or a home.  Renters are eligible, so, too, are non-profits.  Of the several kinds of loans available, some cover damages to structures and property, others are meant to supply funds for payroll and other operating costs.

Borrowers, depending on their financial health, can get up to 30 years to repay.  The loans are the same kind as were offered after hurricanes Irene and Katrina.

The IRS also is offering relief.  Under certain circumstances, affected business owners will be given additional time to file returns and pay taxes.  The service also provides advice on reconstructing lost or damaged business records.

Copyright 2012 ABC News Radio

Tuesday
Sep112012

Whistleblower Gets $104 Million from IRS

Bradley C. Bower/Bloomberg via Getty Images(WASHINGTON) -- An ex-banker and convicted tax cheat who told the IRS how his employer, UBS, helped thousands of wealthy clients duck U.S. taxes has just been awarded $104 million by the U.S. government, a sum his lawyers say is the largest payout ever for a whistleblower.

Bradley Birkenfeld, who was released from federal prison six weeks ago, pleaded guilty in 2008 to helping American clients avoid paying federal income and other taxes to the IRS. As part of his plea, Birkenfeld confessed to helping businessman Igor Olenicoff conceal $200 million in assets and evade paying $7.2 million in taxes.

But while Birkenfeld was confessing his own sins, he also provided testimony that allowed the Justice Department to punish his employer, forcing UBS to admit that it had allowed its clients to evade taxes by hiding their assets offshore. In February 2009, under a deferred prosecution agreement, the company agreed to pay $780 million in criminal fines for offering tax haven accounts for U.S. clients. UBS agreed to release data on almost 5,000 client accounts.

Birkenfeld's lawyers, Stephen M. Kohn and Dean A. Zerbe, of the Washington-based National Whistleblowers Center, said that because of Birkenfeld the IRS has been able to recover $5 billion in revenue from 33,000 U.S. citizens who have voluntarily disclosed their offshore accounts.

"The IRS sent 104 million messages to whistle-blowers around the world -- that there is now a safe and secure way to report tax fraud," said the National Whistleblowers Center in a statement. "The IRS also sent 104 million messages to banks around the world – stop enabling tax cheats or you will get caught."

According to Kohn and Zerbe, the $104 million award is the largest award to an individual whistleblower to date, and the first awarded to an IRS whistleblower.

The IRS report disclosing Birkenfeld's award said that "while the IRS was aware of tax compliance issues related to secret bank accounts in Switzerland and elsewhere, the information provided by the whistleblower formed the basis for unprecedented actions against UBS AG."

Birkenfeld began serving a 40-month prison sentence in January 2010. According to the federal Bureau of Prisons inmate locator, Birkenfeld was released on August 1 and is serving the remainder of his sentence in a community corrections center in the Philadelphia area.

Sen. Charles Grassley, R.-Iowa, who authored the whistleblower laws for tax fraud, said in a statement, "This case provides evidence about how the whistleblower program can be effective because the IRS is saying its work against this kind of tax fraud would not have been possible without the whistleblower. By paying an award as the law allows, the IRS encourages courageous actions by others against such big-dollar tax cheating."

A spokesman for the IRS declined to say how much money has been collected from tax evaders using Swiss bank accounts in recent years. In 2009 The Justice Department and IRS reached an agreement with Switzerland to obtain information from UBS AG to identify information on up to thousands of accounts held by the Swiss banking giant. Justice Department and IRS officials believed as much as $18 billion could be located in those accounts.

"The IRS believes that the whistleblower statute provides a valuable tool to combat tax non-compliance, and this award reflects our commitment to the law," said Michelle Eldridge, an IRS spokeswoman.

Birkenfeld, now 47, worked at UBS for five years. He sought immunity from prosecution when he came forward as a whistleblower, but the DOJ elected to arrest and prosecute him. Under U.S. whistleblower laws, he was allowed to seek 30 percent of the taxes recovered by the IRS via the information he provided.

Copyright 2012 ABC News Radio

Tuesday
Aug072012

Party’s Over for Entertaining on Corporate Jets, Says IRS

John Foxx/Thinkstock(WASHINGTON) -- The Internal Revenue Service’s rules about corporate jets and non-business use, disallowing tax deductions for entertainment, are “overly burdensome,” said the National Business Aviation Association.

Scott O’Brien, senior manager of finance and tax policy of the National Business Aviation Association, said the American Jobs Creation Act of 2004 introduced the rule but it wasn’t finalized until last week.

The IRS defines non-business use of aircraft as entertainment use, and though the rules are complicated, that can include transporting guests on an aircraft that is actually being used for business purposes.

“They can have you unfairly skew disallowance in the way they have you calculate this,” O’Brien said.

“If you have one entertainment-use flight with a lot of individuals, the way they look at it is the proportion of business to entertainment flights,” he said.

That would be a large disallowed deduction, “so the way the IRS set this all up is really unfair,” he added.

O’Brien said the National Business Aviation Association made about 10 suggestions which the IRS ignored, including a “primary purpose test.”

“If you have an airplane already flying on a business trip and it just so happens that some individuals come along for non-entertainment purpose, it’s not like it costs more for non-business passengers,” he said.  ”We felt like that goal was consistent with what Congress wanted in the law.”

“We think that the intent is to disallow the cost of entertainment for that flight, not for the full year,” O’Brien said.

Because the policy has already been in place for a number of years, O’Brien said he did not anticipate it would affect the aviation industry or individual businesses.

Copyright 2012 ABC News Radio







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