from www.news.yahoo.com
Donna Smith Tue Jul 29, 11:59 AM ET
WASHINGTON (Reuters) - More than 1.6 million U.S. businesses owe the Internal Revenue Service more than $58 billion in unpaid taxes for Social Security, Medicare and unemployment insurance, a government watchdog agency said on Tuesday.
In a report to the Senate Homeland Security investigations subcommittee, the Government Accountability Office said the IRS fails to take full advantage of tools available to collect unpaid taxes and to prevent further cheating on payroll taxes.
"When businesses do not remit payroll taxes, they are using employees' money to fund business operations or the personal lifestyle of the businesses' owners," GAO Director of Financial Management and Assurance Steven Sebastian said in testimony to the committee.
This problem is a fraction of the estimated $300 billion or so in unpaid taxes each year that some members of Congress believe can be collected through tougher enforcement.
Payroll taxes are withheld from workers' wages by employers to fund the Social Security and Medicare retirement and health programs. Additional payroll taxes are collected to finance unemployment insurance. When the money is not passed on to the government, general revenues have to be tapped to make up for the loss to the programs' trust funds.
"Many of these businesses repeatedly failed to remit amounts withheld from employees' salaries," the GAO found.
Subcommittee Chairman Carl Levin, a Michigan Democrat, and Sen. Norm Coleman of Minnesota, the panel's top Republican, called on the IRS to beef up enforcement.
"IRS's pursuit of unpaid payroll taxes hasn't gotten the job done," Coleman said. "Rather than aggressively using the collection tools at their disposal, they seem content with hoping these tax deadbeats will come to their senses."
Deputy IRS Commissioner Linda Stiff told the committee that the agency collects 99.8 percent of payroll taxes owed, about $11 trillion over the last 10 years. The $58 billion in unpaid payroll tax debt as of September 2007, represents a 10-year total and $26 billion of that represents principal, with $32 billion in uncollected penalties and interest, she said.
Stiff said the IRS was refocusing efforts to use enforcement tools more effectively in payroll tax cases.
Payroll taxes represent a lion's share of the total revenues collected by the IRS. In 2007, the IRS collected $2.7 trillion in taxes. Of that, $1.7 trillion was payroll taxes, Stiff said.
Tuesday, July 29, 2008
Thursday, July 24, 2008
Disagree with the IRS? Appeal its decision
from www.bankrate.com
By Kay Bell • Bankrate.com
There are as many tax issues as there are taxpayers. Everyone's situation is unique.
But taxpayers who find themselves disagreeing with the Internal Revenue Service share a common bond. Each has the right to appeal the agency's findings.
The IRS appeals system is used most commonly by people questioning the results of a tax-return examination and subsequent tax bill adjustments. But audits aren't the only thing taxpayers can appeal. You also have the right to question:
IRS collection actions, such as liens, levies, seizures and installment-agreement terminations.
Rejected offers in compromise to settle tax bills.
Penalties and interest the IRS adds to your tax bill.
In some cases, an appeal of a tax decision can begin -- and be settled -- immediately. If examination of your return is at an IRS office, you can request an on-the-spot meeting with the examiner's supervisor to explain your position. If an agreement is reached, your case will be closed.
If that fails or the examination took place outside of an IRS office, the tax examiner will write up the case explaining your and the IRS' positions and send the report to the district office for processing. Within a few weeks, you should receive the IRS findings on your case. If you don't agree with this, your next step is to go to an IRS Appeals Office.
A local Appeals Office is a separate and independent IRS office. Its tax-dispute conferences are informal, and can be conducted by correspondence, telephone or in person.
Before taking your case to Appeals, consider:
•
Whether you need help in determining that the IRS made an incorrect decision due to misinterpreting the law. Check IRS and other tax publications discussing your issue or issues.
•
Whether the IRS did not properly apply the law due to a misunderstanding of the facts. Be prepared to clarify and support your position.
•
Whether the IRS is taking an inappropriate collection action against you or you do not agree with its denial of your offer in compromise.
Always refer to specific IRS decisions, usually cited on the examination notice. In each case where you believe the facts used by the IRS are incorrect, make sure you have records or other support available back up your position.
You don't have to have legal representation at an Appeals Office meeting, but if you wish you can be joined by an attorney, certified public accountant or an Enrolled Agent. If you prefer to go it alone, you can get more information from the IRS Web page dedicated to appeals issues.
Most tax differences are settled at the Appeals Office level. But in the instances where taxpayers still are unhappy, they can take their cases to the independent Taxpayer Advocate for help.
Finally, taxpayers who've exhausted all other tax-dispute avenues have the right to head to federal court.
Further information on taxpayer appeals is available in IRS Publication 5, Your Appeal Rights and How to Prepare a Protest If You Don't Agree; Publication 556, Examination of Returns, Appeal Rights and Claims for Refunds; and Publication 1660, Collection Appeal Rights (for Liens, Levies and Seizures).
Keep in mind that during all levels of appeals you must have valid legal reasons based on current tax law for disagreeing with the IRS. You cannot appeal your case based only on moral, religious, political, constitutional or conscientious grounds.
Freelance writer Kay Bell writes Bankrate's tax stories from her Austin, Texas, home. She also writes two tax blogs, Bankrate's Eye on the IRS, and Don't Mess With Taxes.
--
By Kay Bell • Bankrate.com
There are as many tax issues as there are taxpayers. Everyone's situation is unique.
But taxpayers who find themselves disagreeing with the Internal Revenue Service share a common bond. Each has the right to appeal the agency's findings.
The IRS appeals system is used most commonly by people questioning the results of a tax-return examination and subsequent tax bill adjustments. But audits aren't the only thing taxpayers can appeal. You also have the right to question:
IRS collection actions, such as liens, levies, seizures and installment-agreement terminations.
Rejected offers in compromise to settle tax bills.
Penalties and interest the IRS adds to your tax bill.
In some cases, an appeal of a tax decision can begin -- and be settled -- immediately. If examination of your return is at an IRS office, you can request an on-the-spot meeting with the examiner's supervisor to explain your position. If an agreement is reached, your case will be closed.
If that fails or the examination took place outside of an IRS office, the tax examiner will write up the case explaining your and the IRS' positions and send the report to the district office for processing. Within a few weeks, you should receive the IRS findings on your case. If you don't agree with this, your next step is to go to an IRS Appeals Office.
A local Appeals Office is a separate and independent IRS office. Its tax-dispute conferences are informal, and can be conducted by correspondence, telephone or in person.
Before taking your case to Appeals, consider:
•
Whether you need help in determining that the IRS made an incorrect decision due to misinterpreting the law. Check IRS and other tax publications discussing your issue or issues.
•
Whether the IRS did not properly apply the law due to a misunderstanding of the facts. Be prepared to clarify and support your position.
•
Whether the IRS is taking an inappropriate collection action against you or you do not agree with its denial of your offer in compromise.
Always refer to specific IRS decisions, usually cited on the examination notice. In each case where you believe the facts used by the IRS are incorrect, make sure you have records or other support available back up your position.
You don't have to have legal representation at an Appeals Office meeting, but if you wish you can be joined by an attorney, certified public accountant or an Enrolled Agent. If you prefer to go it alone, you can get more information from the IRS Web page dedicated to appeals issues.
Most tax differences are settled at the Appeals Office level. But in the instances where taxpayers still are unhappy, they can take their cases to the independent Taxpayer Advocate for help.
Finally, taxpayers who've exhausted all other tax-dispute avenues have the right to head to federal court.
Further information on taxpayer appeals is available in IRS Publication 5, Your Appeal Rights and How to Prepare a Protest If You Don't Agree; Publication 556, Examination of Returns, Appeal Rights and Claims for Refunds; and Publication 1660, Collection Appeal Rights (for Liens, Levies and Seizures).
Keep in mind that during all levels of appeals you must have valid legal reasons based on current tax law for disagreeing with the IRS. You cannot appeal your case based only on moral, religious, political, constitutional or conscientious grounds.
Freelance writer Kay Bell writes Bankrate's tax stories from her Austin, Texas, home. She also writes two tax blogs, Bankrate's Eye on the IRS, and Don't Mess With Taxes.
--
McCain and Obama tax plans are criticized
from www.latimes.com
McCain and Obama tax plans are criticized
The nonpartisan Tax Policy Center says that both candidates' proposals would increase the national debt by trillions and may make the system more complex.
By Stephen Braun, Los Angeles Times Staff Writer July 24, 2008
WASHINGTON -- The competing tax plans laid out by Sens. Barack Obama and John McCain would both add trillions of dollars to the national debt and could add to the tax system's complexity, a nonpartisan tax research group concluded Wednesday in a newly released report.Both campaigns assert that their plans to continue many Bush-era tax cuts and offer new reductions would aid the economy without massive new spending. But the Washington-based Tax Policy Center warned that under either candidate, "the debt would likely continue to rise as it has over the past eight years."Obama's plan -- cuts targeted to middle- and low-income Americans and increases for the wealthy -- would increase the national debt by an estimated $3.4 trillion in the next decade, the center said. Under a similar analysis, McCain's plan -- largely a continuation of Bush's tax reductions -- would add $5 trillion. The deficit is now $9.5 trillion.Both candidates would maintain the Bush tax cuts for the working poor and middle-income taxpayers. But they differ drastically on how to target the richest Americans. The report estimated that under McCain's plan, Americans who make between $38,000 and $66,000 a year would see average tax cuts of as much as $1,400 in 2012. But the Arizona Republican would aid the wealthiest 1% -- those who make more than $603,000 per year -- with annual tax reductions averaging $127,000.Under Obama's plan, the tax center said, middle-income taxpayers would have tax cuts averaging $2,100 in 2012. But the top 1% of taxpayers would see steep increases -- $38,000 a year, on average -- under the Illinois Democrat's plan.Leonard E. Burman, a Tax Policy Center senior fellow who was on the team that reviewed the candidates' plans, said in an interview that important portions of both plans had yet to be fleshed out.Both proposals are filled with "soft numbers" and sometimes play "fast and loose with their figures," Burman added."We had to make a lot of assumptions because there are big parts of their proposals that are still being fine-tuned," he said.Burman also said that although both candidates' plans attempt to streamline the tax system, they create potential new complexities. Both Obama and McCain would continue the alternative minimum tax, or AMT, long criticized for adding to the tax bite and complexity for middle-class and many upper-middle-class taxpayers.McCain would allow taxpayers to circumvent the AMT with an "optional alternative tax system" that could cause new chaos."If the new alternative tax system does not offer significant tax cuts, having to figure taxes under two systems and estimate which one would be better would add complexity, not reduce it," the center cautions.And although Obama seeks to aid low-income taxpayers by having the government prepare tax returns that the taxpayers would then approve, he has only committed vaguely to "fiscally responsible" reform of the AMT, the center notes.Another concern, Burman noted, is that Obama and McCain have presented "somewhat differing" versions of their plans on the campaign trail than what they have issued on the Web and in position papers."Sen. McCain's proposals on the stump are often far more sweeping than the more measured options outlined by his campaign," the center said. At the same time, "Sen. Obama also often proposes new taxes on high-income households to extend Social Security solvency, but his staff insists that no specific policy exists."stephen.braun@latimes.com
McCain and Obama tax plans are criticized
The nonpartisan Tax Policy Center says that both candidates' proposals would increase the national debt by trillions and may make the system more complex.
By Stephen Braun, Los Angeles Times Staff Writer July 24, 2008
WASHINGTON -- The competing tax plans laid out by Sens. Barack Obama and John McCain would both add trillions of dollars to the national debt and could add to the tax system's complexity, a nonpartisan tax research group concluded Wednesday in a newly released report.Both campaigns assert that their plans to continue many Bush-era tax cuts and offer new reductions would aid the economy without massive new spending. But the Washington-based Tax Policy Center warned that under either candidate, "the debt would likely continue to rise as it has over the past eight years."Obama's plan -- cuts targeted to middle- and low-income Americans and increases for the wealthy -- would increase the national debt by an estimated $3.4 trillion in the next decade, the center said. Under a similar analysis, McCain's plan -- largely a continuation of Bush's tax reductions -- would add $5 trillion. The deficit is now $9.5 trillion.Both candidates would maintain the Bush tax cuts for the working poor and middle-income taxpayers. But they differ drastically on how to target the richest Americans. The report estimated that under McCain's plan, Americans who make between $38,000 and $66,000 a year would see average tax cuts of as much as $1,400 in 2012. But the Arizona Republican would aid the wealthiest 1% -- those who make more than $603,000 per year -- with annual tax reductions averaging $127,000.Under Obama's plan, the tax center said, middle-income taxpayers would have tax cuts averaging $2,100 in 2012. But the top 1% of taxpayers would see steep increases -- $38,000 a year, on average -- under the Illinois Democrat's plan.Leonard E. Burman, a Tax Policy Center senior fellow who was on the team that reviewed the candidates' plans, said in an interview that important portions of both plans had yet to be fleshed out.Both proposals are filled with "soft numbers" and sometimes play "fast and loose with their figures," Burman added."We had to make a lot of assumptions because there are big parts of their proposals that are still being fine-tuned," he said.Burman also said that although both candidates' plans attempt to streamline the tax system, they create potential new complexities. Both Obama and McCain would continue the alternative minimum tax, or AMT, long criticized for adding to the tax bite and complexity for middle-class and many upper-middle-class taxpayers.McCain would allow taxpayers to circumvent the AMT with an "optional alternative tax system" that could cause new chaos."If the new alternative tax system does not offer significant tax cuts, having to figure taxes under two systems and estimate which one would be better would add complexity, not reduce it," the center cautions.And although Obama seeks to aid low-income taxpayers by having the government prepare tax returns that the taxpayers would then approve, he has only committed vaguely to "fiscally responsible" reform of the AMT, the center notes.Another concern, Burman noted, is that Obama and McCain have presented "somewhat differing" versions of their plans on the campaign trail than what they have issued on the Web and in position papers."Sen. McCain's proposals on the stump are often far more sweeping than the more measured options outlined by his campaign," the center said. At the same time, "Sen. Obama also often proposes new taxes on high-income households to extend Social Security solvency, but his staff insists that no specific policy exists."stephen.braun@latimes.com
Wednesday, July 23, 2008
IRS Criminal Investigations increase
from www.yahoonews.com
Thu Jul 17, 5:37 PM ET
WASHINGTON - The IRS Criminal Investigation Division completed more than 4,200 investigations in the 2007 budget year, with about one half resulting in conviction for a crime, according to a report issued Thursday.
The Treasury Inspector General for Tax Administration said the criminal division showed improvement in a number of key areas last year despite a decline in special agents. Those included cases initiated, completed, recommended for prosecution and those concluding in convictions.
The report also noted that investigations referred to the Department of Justice for prosecution stood at an eight-year high, and that for the first time since they began keeping statistics, the division had more investigations awaiting prosecution than open criminal investigations within the division. It said time needed to manage cases being prosecuted cuts into resources available to initiate and complete investigations.
On average, it took 412 days to complete an investigation in 2007.
It said the number of field special agents had declined 3 percent in 2007 to 2,435. "We believe that the continual loss of agents will negatively affect the division's productivity in the near future," said Inspector General J. Russell George.
He also reported that refund returns verified as containing false wage information under the IRS's Questionable Refund Program increased from 84,000 in the 2005 processing year to 211,000 in 2007. The average fraudulent claim in 2007 was $6,479, compared to $3,764 the previous year.
Thu Jul 17, 5:37 PM ET
WASHINGTON - The IRS Criminal Investigation Division completed more than 4,200 investigations in the 2007 budget year, with about one half resulting in conviction for a crime, according to a report issued Thursday.
The Treasury Inspector General for Tax Administration said the criminal division showed improvement in a number of key areas last year despite a decline in special agents. Those included cases initiated, completed, recommended for prosecution and those concluding in convictions.
The report also noted that investigations referred to the Department of Justice for prosecution stood at an eight-year high, and that for the first time since they began keeping statistics, the division had more investigations awaiting prosecution than open criminal investigations within the division. It said time needed to manage cases being prosecuted cuts into resources available to initiate and complete investigations.
On average, it took 412 days to complete an investigation in 2007.
It said the number of field special agents had declined 3 percent in 2007 to 2,435. "We believe that the continual loss of agents will negatively affect the division's productivity in the near future," said Inspector General J. Russell George.
He also reported that refund returns verified as containing false wage information under the IRS's Questionable Refund Program increased from 84,000 in the 2005 processing year to 211,000 in 2007. The average fraudulent claim in 2007 was $6,479, compared to $3,764 the previous year.
IRS Sending Stimulus Payment Information to Veterans, Retirees
from www.irs.gov
IR-2008-91, July 21, 2008
Public Service Announcement: It's Not Too Late To Get Your Stimulus Payment
WASHINGTON — The Internal Revenue Service today reminded qualifying retirees and veterans that it is not too late to file for an economic stimulus payment and announced it will send a second set of information packets to 5.2 million people who may be eligible but who have not yet filed for their stimulus payment.
The packages will contain everything needed by a person who normally does not have a filing requirement but who must file this year in order to receive an economic stimulus payment. There will be instructions, an example Form 1040A return showing the few lines that need to be completed, and a blank Form 1040A. The packages will be mailed over a three-week period starting July 21.
“All it takes is a few simple steps, and the payment can be on its way. It’s not too late to file, but the sooner people file, the faster they’ll receive their money,” said Doug Shulman, IRS Commissioner.
The mailing is part of an IRS summer campaign to reach out to those people who have no requirement to file a tax return but who may be eligible for a stimulus payment of up to $300 ($600 for married filing jointly). For those eligible for a payment for themselves, there also is a $300 per child payment for eligible children younger than 17.
The IRS has accounted for about 75 percent of the approximately 20 million Social Security and Veterans Affairs beneficiaries identified as being potential stimulus recipients. All but 5.2 million of those have either filed a return, filed a joint return or were not eligible for a stimulus payment (for example, they were claimed as a dependent on another’s return).
To reach the remaining recipients, the IRS is working with national partners, members of Congress and state and local officials to ensure that assistance to eligible people is available.
The agency also reminded people that it has more than 400 local Taxpayer Assistance Centers operating normal business hours Monday through Friday. These centers can provide assistance to retirees and veterans trying to receive their payments. A list of addresses and office hours can be found at Contact My Local Office.
The Economic Stimulus Act of 2008 provided for payments of up to $600 ($1,200 for married filing jointly) for taxpayers who normally file a tax return and have a tax liability. It provided that stimulus recipients could receive another $300 for each eligible child younger than 17.
The Act also created a special category for people who had certain types of income but may not file a tax return because their income is too low or their income is nontaxable.
People in this category must have at least $3,000 in qualifying income to be eligible for the minimum amount of $300 ($600 married filing jointly). Qualifying income is the total of Social Security, Veterans Affairs and/or Railroad Retirement benefits plus earned income, including nontaxable combat pay
People receiving only Supplemental Security Income are not eligible. Eligible people must have a Social Security number (unless their spouse is a member of the military) and be neither a dependent nor eligible to be a dependent on another’s tax return.
Receiving the stimulus payment should have no impact on other federal benefits currently being received. The stimulus payment is not taxable. Absent any other filing requirements, filing a tax return to receive a stimulus payment does not mean that retirees and others will have to start filing tax returns again.
As of July 11, the IRS had issued 112.4 million payments totaling $91.8 billion. Payments are based on 2007 tax returns being filed this year. People must file by Oct. 15 in order to receive a payment in 2008. Those who do not file a tax return to obtain their stimulus payment this year may still receive their stimulus payments by filing a 2008 tax return next spring, but then their stimulus payment would be based on their 2008 qualifying income.
Related Item:
Stimulus Payments — It's Not Too Late
IR-2008-91, July 21, 2008
Public Service Announcement: It's Not Too Late To Get Your Stimulus Payment
WASHINGTON — The Internal Revenue Service today reminded qualifying retirees and veterans that it is not too late to file for an economic stimulus payment and announced it will send a second set of information packets to 5.2 million people who may be eligible but who have not yet filed for their stimulus payment.
The packages will contain everything needed by a person who normally does not have a filing requirement but who must file this year in order to receive an economic stimulus payment. There will be instructions, an example Form 1040A return showing the few lines that need to be completed, and a blank Form 1040A. The packages will be mailed over a three-week period starting July 21.
“All it takes is a few simple steps, and the payment can be on its way. It’s not too late to file, but the sooner people file, the faster they’ll receive their money,” said Doug Shulman, IRS Commissioner.
The mailing is part of an IRS summer campaign to reach out to those people who have no requirement to file a tax return but who may be eligible for a stimulus payment of up to $300 ($600 for married filing jointly). For those eligible for a payment for themselves, there also is a $300 per child payment for eligible children younger than 17.
The IRS has accounted for about 75 percent of the approximately 20 million Social Security and Veterans Affairs beneficiaries identified as being potential stimulus recipients. All but 5.2 million of those have either filed a return, filed a joint return or were not eligible for a stimulus payment (for example, they were claimed as a dependent on another’s return).
To reach the remaining recipients, the IRS is working with national partners, members of Congress and state and local officials to ensure that assistance to eligible people is available.
The agency also reminded people that it has more than 400 local Taxpayer Assistance Centers operating normal business hours Monday through Friday. These centers can provide assistance to retirees and veterans trying to receive their payments. A list of addresses and office hours can be found at Contact My Local Office.
The Economic Stimulus Act of 2008 provided for payments of up to $600 ($1,200 for married filing jointly) for taxpayers who normally file a tax return and have a tax liability. It provided that stimulus recipients could receive another $300 for each eligible child younger than 17.
The Act also created a special category for people who had certain types of income but may not file a tax return because their income is too low or their income is nontaxable.
People in this category must have at least $3,000 in qualifying income to be eligible for the minimum amount of $300 ($600 married filing jointly). Qualifying income is the total of Social Security, Veterans Affairs and/or Railroad Retirement benefits plus earned income, including nontaxable combat pay
People receiving only Supplemental Security Income are not eligible. Eligible people must have a Social Security number (unless their spouse is a member of the military) and be neither a dependent nor eligible to be a dependent on another’s tax return.
Receiving the stimulus payment should have no impact on other federal benefits currently being received. The stimulus payment is not taxable. Absent any other filing requirements, filing a tax return to receive a stimulus payment does not mean that retirees and others will have to start filing tax returns again.
As of July 11, the IRS had issued 112.4 million payments totaling $91.8 billion. Payments are based on 2007 tax returns being filed this year. People must file by Oct. 15 in order to receive a payment in 2008. Those who do not file a tax return to obtain their stimulus payment this year may still receive their stimulus payments by filing a 2008 tax return next spring, but then their stimulus payment would be based on their 2008 qualifying income.
Related Item:
Stimulus Payments — It's Not Too Late
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