As the Tax Season 2024 is here, so are potential scams and fraudulent activities, prompting the IRS to issue warnings about common schemes. Here’s a compilation of important facts about various scams and advice by the IRS for Tax Season 2024.

False Fuel Tax Credit Claims

Taxpayers should be highly cautious of false Fuel Tax Credit claims, as warned by the IRS in its Dirty Dozen list for Tax Season 2024. Scammers often target individuals with promises of significant refunds through illegitimate claims for this credit, exploiting unawareness of its eligibility criteria. Vigilance, verification of information, and reliance on official IRS resources are crucial to avoid falling prey to these scams, emphasizing the importance of a thorough review process to ensure accurate and lawful tax filings.

Untrustworthy Tax Preparers (Ghost Preparers)

Taxpayers must remain vigilant against untrustworthy tax preparers, a prominent warning from the IRS’s Dirty Dozen list for Tax Season 2024. The term “ghost preparers” refers to individuals who may not sign tax returns they prepare, leaving taxpayers vulnerable to potential fraud and identity theft. These preparers often promise inflated refunds or charge exorbitant fees, exploiting unsuspecting individuals. Taxpayers must verify the credentials of their tax preparers, ensuring they are qualified, registered, and reputable. Relying on certified tax professionals and maintaining awareness of red flags can help protect against financial losses and legal complications during tax filing.

Fake Charities Exploiting Taxpayer Generosity

The IRS’s inclusion of fake charities in its “Dirty Dozen” list underscores the risks taxpayers face during tax season. These scams prey on people’s goodwill, using deceptive tactics to extract money without benefiting genuine charitable causes. IRS advises to beware of scammers who might use email communications or manipulate caller IDs to deceive people into donating funds to charities. These fraudsters often target groups such as seniors and those with limited English proficiency. Taxpayers must remain vigilant, verifying the legitimacy of charities before donating.

Offer in Compromise Mills

Another scam for Tax Season 2024 is pricey offer-in-compromise (OIC) “mills” that falsely claim their services are necessary to resolve IRS debt. The OIC program offered by the IRS is a beneficial avenue for taxpayers struggling to settle their federal tax debts, and reputable companies are providing legitimate assistance. However, the IRS advises individuals to invest a few moments in reviewing the resources provided on IRS.gov to ascertain if they qualify for the OIC program. This step helps individuals avoid costly promoters and ensures they understand the eligibility criteria thoroughly before seeking assistance.

Helpful Scammers Offering to Set Up Online Accounts

The IRS warns against scammers offering to set up online accounts. The IRS Online Account serves as a convenient tool for individuals to access their tax information. However, it has also become a target for identity thieves who exploit it to file fraudulent tax returns and claim hefty refunds in the victim’s name. Taxpayers should avoid sharing sensitive personal data over the phone, email, or social media to protect themselves and avoid getting caught up in these scams.

Aggressive Promoters Making Questionable ERC Claims

The IRS’s “Dirty Dozen” for tax season 2024 list includes a warning about aggressive promoters who entice taxpayers into making questionable claims for the Employee Retention Credit (ERC). This scam targets small businesses, urging them to engage in activities that could lead to tax non-compliance and penalties. Taxpayers are advised to exercise caution and seek reliable tax professionals’ advice to avoid falling victim to these deceptive practices. As the IRS is continuing tax audits and investigations for false claims of ERC, it emphasizes the availability of a special withdrawal program for businesses to rectify erroneous claims and ensure compliance with tax regulations.

Phishing And Smishing Scams

The IRS has launched its annual “Dirty Dozen” campaign with a strong warning about phishing and smishing scams. These deceptive tactics involve fraudulent emails (phishing) and text messages (smishing) that appear to be from legitimate sources, such as the IRS or financial institutions, but are designed to steal sensitive information like Social Security numbers or financial details. The IRS doesn’t initiate contact with taxpayers by email, text messages, or social media channels to request personal or financial information.

High-Income Filers: Targeted by Illegal Tax Schemes

The improper art donation deductions, charitable remainder annuity trusts (CRATs), and monetized installment sales are all illegal tax schemes targeting high-income filers. These schemes exploit loopholes or misinterpretations of tax laws, posing significant risks of tax evasion and penalties for those involved.

Beware of Spear phishing and “New Client” Scams

In the ongoing spear phishing attacks targeting tax professionals and businesses, these attacks typically involve fraudulent emails or messages designed to deceive recipients into disclosing confidential information, such as login credentials or financial data, under the guise of legitimate communication. Moreover, the surge in “new client” scams adds another layer of vulnerability, as fraudsters exploit the trust between tax professionals and their clients to gain access to sensitive information or perpetrate financial fraud. Tax professionals and businesses must exercise caution, implement robust cybersecurity measures, and educate employees about the signs of phishing attempts to mitigate the risk of falling victim to these malicious schemes.

Social Media Tax Advice: Risks and Pitfalls for Taxpayers

Taxpayers should be wary of relying on social media platforms like TikTok for tax advice, as these channels can be rife with inaccurate or misleading information. Scammers frequently exploit these platforms to propagate fraudulent schemes, encompassing both common tax documents like Form W-2 and more obscure ones like Form 8944. One prevalent scam circulating on social media advises individuals to manipulate income details on Form W-2 and file electronically, falsely promising substantial refunds. Similarly, misinformation surrounding Form 8944 misleads taxpayers into believing they can use it to secure refunds from the IRS, irrespective of their actual tax liabilities. However, Form 8944 is exclusively designated for tax professionals seeking waivers to file paper returns and is inapplicable to individual taxpayers. Falling prey to such scams can lead to severe penalties and legal consequences for filing fraudulent tax returns. Therefore, taxpayers must exercise vigilance, seek guidance from reputable sources, and avoid succumbing to scams on social media platforms to safeguard their financial interests.

Bogus Tax Avoidance Strategies and International Schemes

As the annual taxpayer awareness campaign ends, it’s crucial to highlight the threat posed by bogus tax avoidance strategies and schemes with international elements. These schemes often promise unrealistic or exaggerated tax savings through intricate structures or offshore accounts, luring taxpayers into non-compliance with tax laws and risking severe penalties or legal consequences. With globalization and advancements in technology, scammers exploit cross-border transactions and offshore entities to conceal income, evade taxes, and exploit loopholes in tax regulations. Taxpayers must remain vigilant, seek advice from tax professionals, and ensure compliance with tax laws to avoid falling victim to these deceptive schemes and safeguard their financial well-being.

IRS is highlighting various scams through its “Dirty Dozen” campaign for Tax Season 2024. This list will be updated to include all dozen scams as and when the IRS publishes about these scams. By remaining vigilant, reporting suspicious activities, and engaging certified tax professionals, taxpayers can protect themselves from financial losses, identity theft, and legal complications during tax filing season.

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles; California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices across the country.  Please contact us for more information.  https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

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In this tax season 2024, the IRS sets deadlines for taxpayers to pay their taxes, including estimated tax payments not subject to withholding. The first quarter estimated tax payment deadline for 2024 is April 15. This blog delves into the details of this deadline, its significance, who it affects, why it exists, penalties for non-compliance, exemptions, tools for estimation, required forms, and IRS support.

When is the Deadline?

April 15 is the deadline for tax season 2024 to submit first quarter estimated tax payments to the IRS. This deadline is crucial for individuals and businesses with income sources that do not have taxes withheld, such as self-employment income, interest, dividends, and rental income.

Who Needs to File?

This deadline primarily affects self-employed individuals, freelancers, independent contractors, sole proprietors, partners in partnerships, and shareholders in S corporations. It also includes individuals who receive income from sources where taxes are not automatically withheld.

Reason for Quarterly Payments

Taxpayers are required to make estimated tax payments quarterly because of the pay-as-you-go system in the U.S. tax system. This system ensures that taxes on income earned during the year are paid throughout the year, rather than waiting until the following year. This helps in avoiding large tax bills at the end of the year and ensures a steady flow of revenue for the government.

Types of Income

When estimating quarterly tax payments, taxpayers need to ensure they include all forms of earned income, encompassing regular employment income, part-time work or side jobs, earnings from selling goods or services (typically reported on Form 1099-K), and various other sources like interest, dividends, capital gains, alimony, and rental income. It’s crucial to incorporate all income, including those not subject to withholding, to accurately calculate and fulfill tax obligations, thereby avoiding penalties or underpayment issues.

Penalties for Late Filing

Failure to file estimated tax payments by April 15 can result in penalties. The penalty amount varies depending on factors like the amount of tax owed and the duration of the delay. Taxpayers can use IRS penalty calculators or consult IRS publications to understand the potential penalties they might face.

Estimation and Required Documentation

To report and pay estimated taxes, individuals and businesses to file Form 1040-ES. This form includes worksheets for calculating the estimated tax amount and payment vouchers for submitting payments to the IRS. Additionally, there are online calculators and tax preparation software that can assist in accurately estimating tax liabilities based on income and deductions. It is also advisable to engage certified tax professionals to avoid any tax disputes, penalties, or IRS audits in the future.

Exemptions and Due Date Extensions

Certain groups of taxpayers, including farmers and fishers, recent retirees, individuals with disabilities, those receiving irregular income and victims of disasters are eligible for exceptions to penalties and special regulations.

Following recent disasters, eligible taxpayers in Tennessee, Connecticut, West Virginia, Michigan, California, and Washington have an extended deadline for tax season 2024 for estimated tax payments until June 17, 2024. Similarly, eligible taxpayers in Alaska, Maine and Rhode Island have until July 15, 2024, and eligible taxpayers in Hawaii have until Aug. 7, 2024. For more information, visit Tax Relief in disaster situations.

In addition, taxpayers who live or have a business in Israel, Gaza, or the West Bank, and certain other taxpayers affected by the terrorist attacks in the State of Israel, have until Oct. 7, 2024, to make estimated tax payments.

IRS Support and Assistance

The IRS provides various resources and support for taxpayers regarding estimated tax payments. This includes to include the Interactive Tax Assistant, tax topics and frequently asked questions, and assistance through phone or in-person support at IRS offices or tax assistance centers.

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles; California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices across the country.  Please contact us for more information.  https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

Effective tax planning plays a crucial role in the smooth operations of any business.  With the ever-changing tax environment, it is imperative for small business owners to stay updated and adopt the right strategies to enhance their tax management and ultimately boost profitability.  As the tax season 2024 begins, small businesses need to have in place strategies to minimize their tax liability.

Stay Up to date with Tax Law Changes

It is crucial for small business owners to stay updated on the frequent changes in tax laws for effective tax planning.  In tax season 2024, it is particularly important for them to closely monitor any updates or amendments to tax laws that could have an impact on their businesses.  This encompasses changes in tax rates, deductions, credits, and compliance requirements.  To ensure awareness of any changes that may affect their business, consulting with a tax professional or regularly referring to reliable sources like the IRS official website is highly recommended.

Small Business Tax Law Changes for Tax Season 2024

The 2024 tax season has introduced many significant tax changes, whether you are filing a personal or business tax return.  For business, there are many tax deductions and credit changes that can significantly affect the tax liability.  For instance, business owners were deducting 100% of the cost of work-related meals and beverages at restaurants during the pandemic for the years 2021 and 2022.  For tax season 2024, it is reduced to 50% of the cost back to the 2020 level.

Entrepreneurs operating small businesses can avail increased standard mileage rates for business-related travel.  For those utilizing their cars for business purposes, a deduction of 65.5 cents per mile driven is allowable for the entirety of the 2023 tax year.  Notably, this reflects an increase of 3 cents from the midyear rate recorded in 2022.

Bonus depreciation, established under the Tax Cuts and Jobs Act (TCJA) of 2017, provides business owners with the opportunity to depreciate a significant portion of the expenses associated with a qualified asset.  Under TCJA provisions, business proprietors were permitted to depreciate 100% of the expenses related to qualified assets placed in service between September 27, 2017, and January 1, 2023.  However, for assets put into service in the year 2023, the bonus depreciation rate will gradually decrease by 20% each subsequent year.

Optimize Deductions and Credits

Utilizing deductions and credits can be advantageous in reducing taxable income and decreasing tax obligations.  Small business owners are encouraged to make use of all the deductions and credits available to them in order to minimize their tax burden.  Some common deductions for small businesses include expenses such as:

• Deductible business expenses may cover rent, utilities, supplies, and employee salaries.
• Small businesses can deduct equipment purchases, either fully or through depreciation.
• Home-based businesses can deduct a portion of home-related expenses like mortgage interest, property taxes, and utilities.
• Small businesses offering health insurance coverage may be eligible for a deduction on premium costs.

Small business owners should not only focus on deductions but also consider the various tax credits that are available to them.  These credits can provide significant financial benefits.  Some of the common tax credits that small businesses can explore include the Research and Development (R&D) Tax Credit, which encourages businesses to invest in innovation and development, the Work Opportunity Tax Credit (WOTC), which provides incentives for hiring individuals from certain target groups, and the Small Business Health Care Tax Credit, which helps small businesses provide health insurance to their employees.  By taking advantage of these tax credits, small business owners can reduce their tax liability and potentially save a substantial amount of money.

Take Advantage of Retirement Plans

Contributing to retirement plans like SEP-IRAs, SIMPLE IRAs, or solo 401(k) plans can offer tax benefits and financial security for small business owners.  These contributions are typically tax-deductible and can lower taxable income, while also allowing owners to save for retirement.

Maintain Meticulous Records

Keeping organized and detailed records of income, expenses, receipts, invoices, and other financial documents is essential for effective tax planning and compliance.  These records not only ensure adherence to tax laws but also provide valuable information for maximizing deductions and credits.

Small business owners should create a plan to pay estimated taxes every quarter to avoid penalties and meet tax obligations.  Seeking assistance from a tax professional can help accurately calculate these payments based on the business’s income and expenses.

IRS Audit Group

IRS Audit Group comprises tax professionals, CPAs, enrolled agents, and attorneys.  We are located in Los Angeles; California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices across the country.  Please contact us for more information.  https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

The deadline for Tax Season 2023 for individuals is over, and those who filed for refunds will be receiving the same within 21 days from the filing date.  But, If the taxpayers have received a notice from the IRS that their taxes are incorrect or that they owe money, they can either pay or dispute if IRS is wrong. There are options available to resolve such disputes. The IRS dispute process is an essential part of the tax system, but it can be complicated and intimidating. Managing a dispute with IRS can be a complex and compelling process for taxpayers. Following are the steps to manage a dispute with the IRS. The first step in managing an IRS dispute is understanding how the process works, and what options are available for appealing or litigating the issue at hand.

Understanding the IRS Dispute Process

The IRS dispute procedure consists of numerous steps. Taxpayers can file a dispute if they disagree with the amount of tax they are required to pay or believe the IRS made a mistake in their tax return. If there are any changes that would affect their refund or balance payable, the first step is to file Form 1040X. Taxpayers can submit Form 9465, Form 8857, or Form 843 with the required supporting paperwork if there are no changes. These forms include Instalments Agreement Request, Request for Innocent Spouse Relief, and Claim for Refund and Request for Abatement, respectively. Ensure that taxpayers submit all required forms and documents to initiate the dispute process.

If there is no communication from the IRS regarding the dispute after 90 days from the filing, it is time to move forward with appealing their decision. To do so, follow these steps:

Appealing IRS decision

Taxpayers have the right to appeal an IRS decision, and taxpayers have the right to use the two-step appeals process which involves an administrative appeal. Taxpayers need to submit a written request for reconsideration to the office that made the initial decision within 60 days of receiving a letter of disallowance. This can be done by letter, fax, or online at www.irs.gov/appeals. Taxpayers can request Form 12356-A, which offers guidance on how to complete and submit the appeals with necessary supporting evidence. This phase of the investigation aims to identify why the IRS took certain actions, such as reducing refunds.

Litigating IRS Dispute

Taxpayers need to take legal action if they are unable to resolve their dispute with the IRS. The IRS offers several options for litigating disputes that include.

• Filing a lawsuit against the IRS in court. If a taxpayer has a valid reason for disputing an assessment or collection activity, they can file suit against the IRS in federal court or state court if applicable. Throughout this process, they need a tax attorney who specializes in tax law to represent them.
• Requesting a management hearing with the Appeals Office Reviewer (AOR) is another option when appealing an IRS decision. AOR evaluation from the relevant evidence before determining whether to grant relief or not. This step does not guarantee relief, but it’s usually the first taken in appeals.

The IRS dispute process can be confusing, but it’s important to know taxpayers’ options. It is important to understand the steps included and the options available to taxpayers for resolving the issue. This may include communications with IRS and providing additional information to support their position, requesting an appeals conference with an independent appeals officer, or considering mediation. In some cases, litigation may be necessary. Therefore, seeking tax professional advice and guidance throughout the process can help ensure that taxpayer’s rights are protected and they’re able to achieve the best possible outcome. IRS Audit Group is a tax audit representation company that helps taxpayers navigate such time-consuming dispute processes. Contact us for a free consultation. https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

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There are times when Taxpayers choose to represent themselves in an IRS audit or hire a tax professional to handle the case on their behalf. Those who want to avoid paying legal fees or who feel they have a thorough understanding of tax law may find self-representation to be intriguing. However, it also comes with its own set of risks and potential downsides. Here are some of the pros and cons of self-representation during an IRS audit, and helps taxpayers make an informed decision about how best to handle their audit.

Pros of Self-Representation

Cost Savings: One of the biggest benefits of self-representation is savings on account of Auditor fees. Taxpayers who represent themselves are not required to pay for tax audit representation services. Particularly for individuals or small-business owners who are on a limited budget, this gives considerable savings.

Better Control: The taxpayer has more influence over the process when they act as their own representative. They are in charge of gathering and submitting the required paperwork and data. This enables them to ensure that everything is conducted appropriately and to comprehend every step of the procedure.

Knowledge Enhancement: Self-representation can also be an excellent opportunity to learn more about tax law and the audit process. To make sure they are presenting their case appropriately, the taxpayer will need to read and comprehend tax laws and processes. The knowledge and experience gained will be useful for conducting business thereafter.

Cons of Self-Representation

Lack of Expertise: The audit process can be intimidating for taxpayers who are not familiar with tax law because it is complicated. An established tax audit representation company has experts who have extensive knowledge of tax law with years of experience dealing with the IRS. They are better prepared to identify any deductions or credits that taxpayer misses, and they can ensure that their representation is accurate and complete.

Reduced Emotional Distress: An IRS audit can be stressful, and self-representation can amplify that stress. The IRS correspondence can be handled entirely on behalf of the taxpayer by a tax audit representation firm, lessening their emotional burden and enabling them to concentrate on other facets of their lives.

Timesaving: Self-representation consumes time, and taxpayers who are familiar with the audit procedure would end up with mistakes and omissions. The documentation and correspondence with the IRS can be overseen by a qualified tax audit representation firm, saving the taxpayers’ time and guaranteeing that everything is done correctly.

Reduced Risk of Penalties: If a taxpayer makes a mistake in representation, it could result in penalties or interest charges. A tax professional has the knowledge to guarantee correct and thorough taxpayer representation, lowering the possibility of fines and interest charges.

Self-representation during an IRS audit seems like a cost-worthwhile option, but it is important to consider the potential drawbacks. The lack of proficiency, emotional distress, and time-consuming nature of the process can ultimately lead to mistakes, which can result in fines and interest charges. Therefore, it is generally suitable to seek the services of a professional tax audit representation company. Their experts can provide the necessary knowledge and experience to navigate the audit process successfully and minimize the risk of penalties and interest charges.

If you are facing an IRS audit and require assistance, reach out to the IRS Audit Group based in Los Angeles. We specialize in tax audit representation and aim to guide taxpayers through the audit process while safeguarding their rights. Our team has Lawyers, CPA,s and Enrolled agents who can carefully examine your tax records and returns, communicate with the IRS on your behalf, represent you during the audit, and negotiate with the IRS to help you avoid the stressful ordeal. We ensure that clients achieve the best possible outcome from the audit process. You can contact us to schedule a free consultation. https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

Tax Season 2023’s due date for Tax-Exempt Organisations is May 15, 2023, to file returns. Numerous tax-exempt organizations have received reminders from the IRS on their forthcoming filing deadline of May 15, 2023. Tax-exempt organizations often need to submit certain reports by the 15th day of the fifth month after the end of their accounting period. However, if the 15th falls on a weekend or holiday, the due date is extended to the next business day.

What are Tax Exempt Organizations and Who Are Eligible?

Entities that are excused by IRS from paying federal income tax are known as Tax-exempt organizations. These organizations need to run solely for reasons of religion, charity, science, literature, education, or the prevention of cruelty to children or animals. Charitable organizations, churches and other religious institutions, educational institutions, hospitals, and social welfare organizations are examples of tax-exempt organizations. One can also find out whether an organization is tax-exempt using the IRS tool provided.

How to File the Returns for Tax Season 2023?

To make it easier to comply with reporting obligations, tax-exempt organizations are encouraged to file their returns electronically. Electronic filing provides a quick acknowledgment of the IRS receiving the return and reduces processing time. For the tax season 2023, organizations filing Form 990, 990-EZ, 990-PF, or 990-T must submit their returns electronically, and private foundations filing Form 4720 must also file the form electronically. Charities and other tax-exempt organizations can file these forms electronically using an IRS-authorized e-File Provider. Furthermore, organizations eligible to submit Form 990-N need to do so electronically and can use Form 990-N (e-Postcard) on the IRS website to file. By filing their tax returns electronically, tax-exempt organizations can comply with the reporting requirements quickly and efficiently.

Apply for an Extension of Time to File the Tax Returns for 2022

If a tax-exempt organization is unable to file its return by the due date, it can request an extension of time to file using Form 8868, Application for Extension of Time to File an Exempt Organization Return. This form must also be filed by the deadline of the tax season 2023, i.e., May 15, 2023. The extension provides an additional six months to file the tax return. However, the extension does not extend the time to pay any taxes owed, it only allows the organizations to file the returns at a later date. Organizations that cannot pay any taxes owed by the original due date may be subject to penalties and interest.

Avoid these Errors While Filing for the Tax Season 2023

Tax-exempt organizations can avoid penalties and interest by avoiding common errors when filing their tax returns. IRS warns of a few common mistakes such as

• Failing to file on time or requesting an extension.
• Not disclosing all sources of income, including income from unrelated businesses.
• Failing to disclose expenses accurately, such as compensation paid to officers and directors.
• Failing to include all necessary schedules and disclosures.
• Failing to maintain adequate records and documentation to support the tax return.

Tax-exempt organizations should take the appropriate precautions to ensure that their tax returns are filed accurately and on time to avoid errors, including maintaining thorough records, checking their tax forms before submitting them, and seeking expert assistance like a tax professional as needed.

In case one need assistance in filing or disputing the tax owed, the IRS Audit Group from Los Angeles can help. IRS Audit Group is a tax audit representation company that helps taxpayers navigate the audit process and ensure that their rights are protected during the audit. We review your tax records and returns, communicate with the IRS, represent you at the audit, and negotiate with the IRS so that you don’t have to go through a stressful process. We ensure the best possible outcome for the clients. Contact us for a free consultation.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

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Tax season can be a stressful time for those who run behind the filing schedule. Taxpayers who aren’t able to file their returns for tax season 2023 by April 18, 2023, deadline, can request an extension. Filing an extension will give an additional six months to file taxes. However, it is important to note that an extension does not give taxpayers extra time to pay any taxes owed. Taxpayers need to pay their federal income tax due by April 18, 2023, to avoid interest and penalties.

If you have missed paying the taxes and/or failure to file an extension before the deadline, the following options are the next actions available now.

Option 1: Pay Taxes as Soon as Possible.

If one owes taxes, it is important to pay them as soon as possible. If you are unable to pay the full amount, then can still make a partial payment to reduce the amount of interest and penalties. Taxpayers can make a payment online using the IRS Direct Pay system, which allows individuals to pay directly from their bank account. Taxpayers can also pay by credit or with a debit card, with certain additional fees associated with this method.

Option 2: Set Up a Payment Plan

The IRS gives an option for taxpayers who cannot pay the full amount owed all at once. They can set up a payment plan with the IRS. This will allow taxpayers to make monthly payments until the balance amount is paid in full. To set up a payment plan, an individual needs to fill out Form 9465.

There are two types of payment plans available: short-term and long-term. A short-term payment plan allows payment of the balance in full within 120 days. No extra fee associated with this plan, but interest and penalties will continue to accrue until the balance is paid in full. A long-term payment plan allows payment of a balance over a period of several months or years. There is a fee associated with this plan, and interest and penalties will continue to accrue until the balance is paid in full.

Option 3: Offer in Compromise

If the taxpayer is unable to pay the full amount owed and can’t set up a payment plan, they are eligible for an Offer in Compromise. This is an agreement between the taxpayer and the IRS to settle the debt for less than the full amount owed. To be eligible for an Offer of Compromise, one needs to demonstrate that paying the full amount owed would cause financial hardship. And also need to provide detailed financial information, including their income, expenses, assets, and liabilities. To apply for an Offer in Compromise, the individual needs to fill out Form 656. It is important to note that an Offer in Compromise is not guaranteed, and the IRS will carefully review the individual’s financial information before making a decision.

In case an individual has missed the tax season 2023 deadline and owes taxes; it is important to act as soon as possible. Filing an extension, paying taxes as soon as possible, setting up a payment plan, or exploring an Offer in Compromise are all options to consider. Be sure to consult with a tax professional to determine the best course of action for the specific situation.

IRS Audit Group is Los Angeles-based company that offers tax audit representation services to individuals and businesses facing IRS audits or disputes. The company’s team consists of CPAs, tax attorneys, and enrolled agents who have experience working on both sides of tax disputes. If you receive any mail from IRS regarding a tax audit, don’t panic and don’t delay, contact a tax professional who is experienced in handling IRS audits by us. Contact us for a free consultation on understanding your tax situation.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

The Internal Revenue Service (IRS) has recently announced that around 1.5 million people across the country have not yet claimed their refunds for the tax year 2019. However, the deadline to file the returns is July 17, 2023, which is three years after the usual deadline. Due to the COVID-19 pandemic crisis, the IRS deferred the deadline for 2019 unfiled returns. The average median refund for 2019 is $893, and the IRS has estimated that $1.5 billion in refunds are still unclaimed.

Many taxpayers may have forgotten or ignored their tax refunds since 2019 due to the pandemic. To prevent losing out on the opportunity, taxpayers need to submit their refund requests prior to the deadline. Typically, individuals have three years to file their tax returns and request any refunds.

While many people would have missed out on filing their tax returns due to the unusual situation caused by the pandemic, some stand to lose more than just their refund of taxes withheld or paid during 2019. Earned Income Tax benefit (EITC) is a tax benefit that many low – and moderate-income employees are eligible for. The credit’s maximum value for 2019 was $6,557. The EITC provides assistance when an individual or family’s income is below a specific threshold. Those who qualified for the EITC in 2019 had incomes below particular thresholds, based on the number of qualifying children.

Taxpayers requesting a 2019 tax refund should also be aware that their checks will be held if they fail to file tax returns for 2020 and 2021. Additionally, the refund will be applied to any amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or past-due federal debts, such as student loans.

Where To Obtain Essential Documents for Filing 2019 Tax Return?

Even though the tax year was three years ago, the IRS has offered taxpayers several ways to access the data they need to submit their 2019 tax forms. To ensure taxpayers have enough time to file before the deadline, IRS advises people to get started as soon as possible. One approach is to ask their employer, bank, or other payers for copies of important records like Forms W-2, 1098, 1099, or 5498. Another choice is to order a free wage and income transcript via Get Transcript Online at IRS.gov. For many taxpayers, this instrument is by far the quickest and easiest choice. As an alternative, individuals can submit Form 4506-T to the IRS to obtain a “wage and income transcript.” However, it is essential to plan since written requests can take several weeks.

Depending on a household’s tax circumstances, the actual refund amount can change. Therefore, to avoid missing the deadline, taxpayers are urged to review their records and start gathering documentation.

IRS Audit Group is a tax audit representation firm located in Los Angeles, California. If the IRS requires more information to validate your tax return filing, they may ask for it, and in rare cases, they may initiate a tax audit via mail notice. In such situations, it is crucial to have the assistance of a licensed tax professional like the ones at IRS Audit Group. IRS Audit Group is comprised of qualified CPAs and IRS Enrolled Agents. They can analyze your tax situation and help alleviate the burden of dealing with an IRS audit. Having proper representation in an IRS audit is essential, and the IRS Audit Group can provide the necessary support to navigate the process successfully. To learn more about our services, visit the website and contact us for further information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

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Cryptocurrencies and other digital assets have experienced an increase in activity and acceptance by the public in recent years. For this Tax Season 2023, the IRS has increased its efforts to provide assistance to taxpayers on the tax treatment and reporting requirements related to these digital assets. The IRS has introduced the new term “digital assets“ to refer to “virtual currencies”.

What is Digital Asset?

Any digital representation of value that is on a cryptographically protected distributable ledger or any other equivalent technology as specified by the Secretary is referred to as a digital asset, according to the IRS. The IRS lists a number of instances of digital assets, including NFTs, stablecoins, as well as virtual currencies like a cryptocurrency that can be used for payments (non-fungible tokens that are unique digital identifiers recorded in a blockchain).

Disclosure on Individual Tax Return 

To assist taxpayers in providing accurate answers, the guidelines for answering the question have been clarified and broadened in this tax year 2022 forms. Every individual filer must respond to the question with simple “yes” or “no” answers on the front of Form 1040, U.S. Individual Income Tax Return, whether they received or sold a digital asset in the tax year 2022, regardless of whether they are associated with digital assets or not. The subject, which is now on 2022 forms, gives more information and specificity to help taxpayers understand when to correctly mark the “Yes” or “No” boxes.

When to Check “Yes” Or “No”?

In general, if a taxpayer got digital assets in the form of a payment, prize, or award, they should check “Yes”. Also, a taxpayer should select “Yes” if they obtained digital assets as a result of mining or a hard fork (the division of a cryptocurrency into two). A taxpayer should also tick “Yes” if they have given up any other financial stake in a digital asset by payment, sale, exchange, or swap for another digital asset. Check “No” if a taxpayer simply owned digital assets during the year without engaging in any transactions. A taxpayer should also select “No” when transferring digital assets between accounts that share the same owners or when buying digital assets with money that isn’t digital.

How to Report Digital Asset Income?

Digital asset income is reported in much the same way as other revenue, mostly dependent on the source of the income. If digital assets are received in exchange for work, the taxpayer must disclose the value of those assets as wages on your tax return 2022. If the digital assets received were payment for services provided, the value of those assets would be reported on Schedule C, Profit or Loss from Business. Similarly, Schedule C would also record any such dispositions of digital assets to clients made in the course of a trade or company.

If digital assets are held as capital assets and sold, exchanged, or transferred it during the tax year 2022, the investor must use Form 8949, Sales and Other Dispositions of Capital Assets to calculate the gain or loss from that activity. The gain or loss is then reported on Schedule D, Capital Gains, and Losses. If, however, digital assets were transferred to an individual as a gift other than the taxpayer’s spouse during the tax year 2022, Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, will generally need to be filed if the value exceeds $16,000.

An incorrect or false response to the updated digital asset question could create complications for taxpayers in the future. For instance, an incorrect response may result in various types of penalties. The advice and assistance from knowledgeable Dual Licensed Tax Professionals and CPAs might be helpful when deciding how to answer the digital asset question instance.

IRS Audit Group is a tax audit representation firm in Los Angeles, California. Usually, in a few cases, the IRS may ask for more information to validate the tax return filings. But rarely, IRS may like to audit your tax information through a letter of notice via Mail. In such cases, it is important to engage a tax professional like ours to represent your tax audit. Our licensed professionals comprise qualified CPAs and IRS Enrolled Agents. They can analyze your tax situation and help alleviate your burden. Please contact us for more information. https://irsauditgroup.com/contact/

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The Internal Revenue Service (IRS) has issued warnings of new scams that urge taxpayers to use wage information on a tax return to claim false credits in hopes of getting a big refund. The new scheme circulating on social media encourages people to use tax software to fill out a Form W-2 to include false information. Scam artists encourage taxpayers to make up numbers showing large amounts of income and related withholding. Then, the scammers suggest simply e-file a bogus tax return to snag a large refund due to the amount of fake withholding. This deliberate misinformation about inflated income is used to take advantage of refundable tax credits.

Scam Variations

Two variations of this scheme are also being seen by the IRS; both involve misusing Form W-2 wage information in hopes of generating a larger refund.

• One variation involves scammers suggesting taxpayers file Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to apply for a credit based on earnings made as an employee rather than a self-employed individual. These credit dates to the pandemic period for 2020 and 2021 and can’t be accessible for 2022 tax returns.
• Another variation of this scam involves taxpayers making up fictional employees that they claim are employed in their household and using Schedule H, Household Employment Taxes. Then, taxpayers file for a refund based on false sick and family wages they never paid in the first place.

Many such scams, where taxpayers suggesting to claim huge refunds by filing the tax return electronically in hopes of getting a substantial refund.

Vigilance

The IRS reminds taxpayers that they are actively watching for this scheme and others along with the Security Summit partners in the tax industry and the states. In addition, the IRS works with payroll companies and large employers—as well as the Social Security Administration—to verify Form W-2 information.

Penalties

Falling for such scams unknowingly or deliberately for getting viral on social media will be subject to a wide range of penalties. This may include a frivolous return penalty of $5,000. Filers also run the risk of criminal prosecution for filing a false tax return.

What To Do?

Seek out tax advice from credible sources, including the IRS website, and consult trusted tax professionals. Ignore advice from viral reels and videos that sounds too good to be true. And please do not share such contents which misguides other taxpayers. For anyone who has participated in one of these schemes, there are several options that the IRS recommends. People can amend a previous tax return or consult with a trusted tax professional.

IRS Audit Group is a tax audit representation firm from Los Angeles, California. The company employs a team of certified tax lawyers who possess expertise in both state and federal tax audits. Irrespective of the client’s location, these tax professionals can evaluate your audit situation and represent you before the IRS to secure a favorable outcome for the client. Please contact us for more information. https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]