Officially, the 2025 tax season started on Monday, January 27.  The IRS anticipates over 140 million individual tax returns in this tax season 2025 to be filed before the federal deadline on Tuesday, April 15. This year more than half of these returns are expected to be filed with the assistance of a tax professional. To ensure accuracy and safeguard against potential scams, the IRS strongly encourages taxpayers to seek help from a trusted tax professional.

Here are some important updates and tips to be aware of while you begin your tax filing.

IRS Online Account

For the average taxpayer, filing the annual tax can be confusing. There are numerous tools and services available to help individual taxpayers, one of which is an IRS Online Account. This digital platform allows taxpayers to quickly access tax information, making the tax season 2025 easier and helping to safeguard your tax information.

Benefits of IRS Online Account

• The IRS Online Account allows taxpayers to access information on their payoff amount, which is updated on the current day
• Taxpayers can view the balance for each tax year in which they owe taxes
• It displays their payment history
• Key details from their most recent tax return, as originally submitted
• Payment history and the details of any payment schedule they have set up with the IRS
• Digital copies of any IRS notices that they have received

Gather and organize all year-end income documents

It is significant for taxpayers to have all of the relevant paperwork before starting to prepare their returns. This allows them to file a complete and accurate tax return. Here is some information that taxpayers need before filing their taxes:

• Social Security Numbers
• Bank account and routing numbers
• Sources of income
• Types of deductions

 Understand refund timing and how to avoid delays

Several factors can influence the timing of a refund once the IRS receives the tax return. While most of the refunds from the IRS are issued in less than 21 days, some returns may require further review and processing time if there are any problems, missing information, or indications of identity theft or fraud.

Use direct deposit for a faster refund

The quickest method for taxpayers to receive their refund is to file electronically and select direct deposit. Since refunds are electronically deposited, there is no chance of a paper check being stolen or lost in the mail. It’s also the easiest way to get a refund.

Free filing options

75% of all taxpayers can use free brand name tax software to prepare and file their federal income tax returns online through IRS Free File. All taxpayers, regardless of income level, can use the IRS Free File Fillable Forms.

Identity Protection Personal Identification Number (IP PIN)

Tax season comes not only the responsibility of filing returns but also the increased risk of identity theft. In response, from this tax season 2025, the IRS has created a key tool for taxpayers: The Identity Protection Personal Identification Number (IP PIN).

The IRS IP PIN is a six-digit number provided to eligible taxpayers to help prevent fraudulent use of their Social Security Number (SSN) on federal income tax returns. Each year a new IP PIN will be generated. The IRS adds an extra layer of security by providing a unique PIN to each taxpayer who opts in, making illicit access much more challenging.

Applying for an IP PIN is simple and can be done online through the IRS website. The process includes validating your identity via the IRS secure portal, which may require information from previous tax returns, personal accounts, or personal identity documents. The IRS offers alternative ways to apply for an IP PIN. These include applying via mail or in person at an IRS office.

1099-K Threshold Changes

Form 1099-K is used to record the yearly gross amount of transactions (e.g., digital payments, credit card/debit cards, store value of gift cards, payment applications, and online marketplaces) processed by third-party settlement organizations (TPSO). The form is used for reporting taxable income. A much-anticipated 1099-K reporting threshold change for online marketplaces and payment apps will come into effect for the following two years. Form 1099-K should be sent to:

• Taxpayers who recorded more than $2,500 in business transactions during calendar year 2025
• Taxpayers who recorded more than $600 in business transactions in calendar year 2026

Digital Assets on Taxes in Tax Season 2025

The IRS definition of a digital asset is any digital representation of value maintained on a cryptographically protected distributed ledger (blockchain) or similar technology. Cryptocurrencies, NFTs, stablecoins, and tokenized securities are increasingly popular among digital assets. Anyone who sold cryptocurrency got it as payment, or had other digital asset transactions must appropriately report it on their tax returns.

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 nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

Tax debt can be a daunting challenge for many individuals and businesses. Incurring debt with the Internal Revenue Service (IRS), whether due to financial hardships, errors in tax submissions, or late payments, can lead to considerable stress, penalties, and possible legal repercussions. When taxpayers cannot pay their full tax liability, the IRS offers a potential solution known as an Offer in Compromise (OIC). This program allows taxpayers to settle their tax debt for less than the full amount owed, providing relief in certain circumstances.

What is an Offer in Compromise?

An Offer in Compromise is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. This option is available to those who can demonstrate that paying the full amount would cause financial hardship or that there is doubt as to the collectability of the full amount.

Types of Offers in Compromise

If you owe IRS the debt in this tax season 2025, understand the three types of OIC programs below to enroll.

1. Doubt as to Collectability: This is the most common type of OIC. It applies when the taxpayer’s income, expenses, and asset equity indicate that they cannot pay the full amount of the tax debt.
2. Doubt as to Liability: This type of OIC is used when there is a genuine dispute about the accuracy of the tax debt. For example, if the IRS made an error in calculating the tax liability, the taxpayer may qualify for this type of offer.
3. Effective Tax Administration: This option is available when paying the full tax debt would not be fair or equitable due to exceptional circumstances, such as a serious illness or disability.

Eligibility for an Offer in Compromise

To qualify for an OIC, taxpayers must meet several criteria as below.

• File all required tax returns and make all required estimated tax payments.
• Not be in an open bankruptcy proceeding.
• Have a valid extension for a current year return (if applying for the current year).
• Employers must have made tax deposits for the current and past two quarters before applying.

Taxpayers can use the IRS pre-qualifier tool to find out if they are eligible.

How to apply for an Offer in Compromise?

The OIC process can be complex and time-consuming, but with the help of a tax professional, it can be navigated successfully. Here’s an overview of the steps involved:

1. Determine Eligibility: A tax professional can help you assess whether you qualify for an OIC based on your financial situation.
2. Complete the Application: The OIC application requires detailed financial information, including various forms such as Form 433-A (OIC) for individuals or Form 433-B (OIC) for businesses. Accuracy is critical, as errors can lead to rejection.
3. Submit the Offer: Along with the application, you must submit a non-refundable application fee of $205 and an initial payment toward your offer. To calculate an initial offer amount, you will need to gather information about your financial situation, including cash, investments, available credit, assets, income, and debt. A tax professional can extend their hands in estimating the initial payment offer.
4. IRS Review: The IRS will review your application, request additional documentation if needed, and make a determination. This process can take several months.
5. Acceptance or Rejection: If your offer is accepted, you must comply with the terms of the agreement, which may include making payments over time. If your offer is rejected, you may appeal the decision or explore other tax resolution options.

Make a copy of your application package (all the forms you have filled) and keep it for your records. Mail the completed application package to the appropriate IRS facility mentioned in this booklet.

Payment Options for OIC

You can pay your offer amount in two ways, either a lump-sum payment or a series of periodic payments. Your initial payment varies depending on your offer and the payment method you choose.

1. Lump-sum Payment: With this option, you must make an initial payment of 20% of the total amount with your application and then pay the remaining balance in no more than five payments. You will have up to five months to pay the whole amount after your OIC is accepted.

2. Periodic Payment: In the periodic payment method, you can make an initial payment with your offer and then continue to pay the remaining amount in monthly installments until it is paid in full.

If you meet the low-income certification requirements which is mentioned in Form 656, Section 1, you do not need to make an initial payment. Furthermore, if you select the periodic payment option, you must continue to make monthly payments while the IRS reviews your OIC application.

How a Tax Professional Can Help

Navigating the Offer in Compromise process can be challenging, especially for those unfamiliar with IRS procedures and requirements. A tax professional can provide invaluable assistance by:

• Evaluating Your Financial Situation: A tax professional can help you determine whether an OIC is the right solution for your tax debt.
• Preparing Your Application: Ensuring that your application is complete, accurate, and supported by the necessary documentation is critical to success.
• Negotiating with the IRS: Tax professionals have experience communicating with the IRS and can advocate on your behalf to achieve the best possible outcome.
• Exploring Alternatives: If an OIC is not the right option, a tax professional can help you explore other solutions, such as installment agreements, penalty abatement, or currently not collectible status.

If the IRS accepts your OIC, you must pay the offered sum and follow all other requirements of the agreement. This includes filing your future tax returns and paying any taxes owed on schedule during the next five years. If your OIC is rejected by the IRS, you have 30 days to file an appeal. You can request an appeal by submitting Form 13711 or a separate letter.

If you’re not sure about the OIC option, speak with a tax professional who can explain the implications of making an offer. IRS Audit Group is the best in the business, tailored to your specific scenario, and will handle all your tax concerns from start to end.

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 nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

The Internal Revenue Service (IRS) and the Coalition Against Scam and Scheme Threats (CASST) have announced several changes for the 2025 tax filing season. These changes are designed to protect taxpayers from becoming victims of scams and schemes and to prevent tax professionals from having their credentials compromised. Below are a few changes that are important for taxpayers before filing.

1. New Fuel Tax Credit Statement

To protect taxpayers, the IRS has introduced a new form, the “Statement Supporting Fuel Tax Credit (FTC) Computation – 1,” to educate taxpayers on the eligibility requirements for claiming the Fuel Tax Credit. This credit is designed for off-highway business and farming use.

Key Details:

• Who Should File the New Statement? Individuals filing Form 1040, U.S. Individual Income Tax Return, for the tax year 2024 who claim non-taxable use of gasoline, aviation gasoline, undyed diesel fuel, or undyed kerosene on Form 4136, Credit For Federal Tax Paid On Fuels.
• Location of the New Statement: The “Statement Supporting Fuel Tax Credit (FTC) Computation – 1” is in the instructions for Form 4136 for the tax year 2024. The statement should be completed and attached to Form 1040 along with Form 4136.
• Information Required: The statement asks for business information, including the business name and Employer Identification Number (EIN), and details about the machinery or vehicle for which the fuel was purchased. Taxpayers will also need to complete a table showing the relationship between the estimated purchase price of the fuel and the actual cost and gallons reported on Form 4136.
• Documentation: Taxpayers should maintain receipts and explanations with their records but should not include them with the tax return. The IRS may request proof, such as receipts, later. No proper documentation can even lead to the IRS issuing notice of tax audits. In such a case, a professional tax audit representation firm must be engaged to represent you with the IRS officials.
• Erroneous Claims: Claims based on frivolous positions or intended to delay tax administration are subject to a penalty under the Internal Revenue Code (IRC) 6702(a). This penalty is $5,000 for each improper credit claimed and is assessed against each spouse on a married filing jointly return.

2. Increased Review of “Other Withholding” Claims

The IRS is stepping up its review of “other withholding” claims on Line 25C of Form 1040. Taxpayers are encouraged to attach supporting documentation to their returns to reduce potential delays in verification.

Key Forms Covered by Line 25C:

• Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding.
• Form 8805, Foreign Partner’s Information Statement of Section 1446 Withholding Tax.
• Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests.
• Form W2G, Certain Gambling Winnings.
• Form 8959, Additional Medicare Tax.
• Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc.

3. Addressing “Ghost Preparers”

During the tax season 2025, the IRS will send letters to taxpayers whose returns appear to have been completed by a paid preparer who did not sign or include their PTIN. These letters are intended to educate taxpayers about the dangers of “ghost preparers” and to help the IRS identify those who are preparing returns without proper identification.

Issues with Ghost Preparers:

• Ghost preparers can leave taxpayers exposed to inaccurate claims.
• They often vanish after filing the return, leaving the taxpayer to deal with any issues that arise.

4. CASST Task Force and Public-Private Partnership

Convened by IRS Commissioner Danny Werfel, the CASST task force includes federal and state tax agencies, software and financial companies, and key national tax professional associations. This group has formed a new public-private partnership focused on combating scams and schemes.

Commissioner Werfel’s Statement: “Since its creation, this special group across the tax community has been working to take extra steps to protect taxpayers and the tax professional community. This effort includes expanding outreach and education on emerging scams, developing innovative approaches to identify potentially fraudulent returns at the point of filing, and creating infrastructure improvements to protect taxpayers as well as federal, state, and industry tax systems.”

Stay Vigilant

The IRS and CASST members anticipate an increase in misinformation spread by influencers and scammers around the 2025 tax season. Instead of relying on ill-informed information from social media or shady tax return preparers, taxpayers should consult trusted tax professionals.

Trusted Sources for Tax Information:

• Follow IRS social media.
• Visit an IRS walk-in center.
• Talk to a certified tax professional.

Reporting

The IRS encourages the public to report improper and abusive tax schemes, as well as tax return preparers who knowingly prepare improper returns, including “ghost preparers.” Reports can be made by mailing or faxing a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers, along with supporting material, to the IRS Lead Development Center.

• Mail: Internal Revenue Service Lead Development Center MS7900 1973 N. Rulon White Blvd Ogden, UT 84404
• Fax: 877-477-9135

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 nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

The Internal Revenue Service announced the 2025 tax season to begin on January 27, 2025. Understanding tax deadlines is crucial for effective financial planning and compliance. Missing key dates can lead to significant consequences, including penalties for late filing or payment, accumulating interest on unpaid taxes, and potential legal implications such as tax audits, wage garnishments, or other enforcement actions. Here are the key tax deadlines for 2025:

Personal Tax Filing Deadlines:

• April 15, 2025: Deadline for filing individual income tax returns (Form 1040).
• October 15, 2025: Extended deadline for individuals who have filed for an extension.

Business Tax Filing Deadlines:

• March 15, 2025: Deadline for Partnerships (Form 1065) and S-Corporations (Form 1120-S).
• April 15, 2025: Deadline for C-Corporations (Form 1120).
• September 15, 2025: Extended deadline for businesses that have filed for an extension.

Other Key Deadlines:

Any deadline on a weekend or legal holiday is typically extended to the next business day. For example, since June 15, 2025, is a Sunday, the deadline will be June 16, 2025.

State-Specific Deadlines and Extensions

While the federal tax filing deadline is typically April 15, state tax deadlines can vary. Many states align with the federal deadline, but some set different dates due to state-specific holidays or administrative decisions. For example, in Massachusetts and Maine, Patriots’ Day can affect the tax deadline. A few portals offer a state-by-state breakdown of tax deadlines. Additionally, certain states without income taxes may have other tax deadlines to consider. It’s essential to consult your state’s tax authority to confirm specific deadlines and ensure timely compliance. Federation of Tax Administrators provides a comprehensive list of state tax forms and filing options.

Additionally, the IRS provides information on tax relief for taxpayers impacted by specific events, which may affect deadlines. The IRS provides a list of state-specific tax resources that may help understand local requirements: IRS State Tax Links.

Additional Resources and Tools

Links to IRS forms and official resources:

• • Form 1040 instructions.
  • Form 4868 for individual extensions.
  • Form 7004 for business extensions.

IRS Customer Helpline: 1-800-829-1040

Avoiding Penalties and Interest

Filing your taxes on time and paying any amounts due is critical to avoid unnecessary penalties and interest charges. Understanding the common causes of penalties and implementing simple strategies can save you from financial strain and added stress.

Common Reasons for Penalties

Tax penalties typically arise due to two primary reasons:

Late Filing vs. Late Payment:

Tips to Avoid Penalties

By taking proactive steps, you can minimize the risk of penalties:

• Pay at Least 90% of Your Estimated Liability: Paying most of your estimated taxes by the filing deadline can help avoid underpayment penalties.
• Set Reminders for Deadlines: Use digital tools or calendar alerts to stay on top of filing and payment dates.
• Use IRS Resources: Access tools like the IRS Tax Calendar or consult with tax professionals to ensure compliance.

Conclusion

Understanding and adhering to tax deadlines is vital for effective financial planning and avoiding unnecessary penalties or stress. As we’ve outlined, key dates like April 15, 2025, for individual filing and March 15, 2025, for business filing should be marked on your calendar. Extensions, while helpful, only grant more time to file—not to pay. Planning ahead, estimating your tax liabilities, and making payments by the original deadlines can significantly reduce the risk of penalties and interest.

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 nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

IRS has begun to accept applications for Low Income Taxpayer Clinic (LITC) matching grants from all qualified organizations. Eligible organizations can start applying from April 22, 2024, to June 12, 2024, for the grants awarded from Jan 2025 to Dec 2025.

What is Low Income Taxpayer Clinic (LITC)?

Low-Income Taxpayer Clinics (LITCs) are organizations that provide free or low-cost assistance to low-income taxpayers who have disputes with the IRS or need help understanding and complying with their tax obligations. LITCs are typically independent from the IRS and offer services such as representation in IRS audits, appeals, and tax court proceedings, as well as education and outreach to taxpayers.

Who is an Eligible Organization?

To qualify for IRS grants to operate a LITC, organizations must meet certain eligibility criteria outlined by the IRS.

1. A clinical program at an accredited law, business, or accounting school whose students represent low-income taxpayers in controversies with the IRS under the supervision of a qualified representative (and when necessary, refer to qualified volunteers to provide representation when the students cannot do so);
2. An organization whose employees and volunteers represent low-income taxpayers in controversies with the IRS;
3. An organization exempt from tax under IRC Section 501(a) whose employees and volunteers represent low-income taxpayers in controversies with the IRS or refer low-income taxpayers to qualified representatives to provide representation;
4. An organization described in examples 1), 2), or 3) that also operates a program to inform ESL taxpayers about their taxpayer rights and responsibilities under the IRC; and
5. An organization that operates a program to inform ESL taxpayers about their taxpayer rights and responsibilities under the IRC.

IRC Section 7526(c)(5) requires clinics to provide matching funds on a dollar-for-dollar basis for all federal funds awarded by the IRS. The matching funds requirement ensures that each LITC grant represents a financial partnership between the clinic and the federal government for the benefit of low-income and ESL taxpayers.

What’s New in Tax Season 2024?

• The eligibility criteria have been expanded to better serve low-income and ESL taxpayers. It removed the requirement for eligible organizations to provide direct controversy representation. Representation may be provided by referring taxpayers to qualified representatives who have agreed to handle the referred cases on a pro bono
• For previous years, the maximum annual federal funding available was $100,000, which is increased to $200,000 as included in the President’s fiscal year 2025 Budget Request. If the amount differs when Congress appropriates funds, the LITC Program Office will adjust all awards accordingly.

How To Apply?

There are two types of LITC grant applications: LITC Full Grant Applications and NCC Requests.

1. A new applicant seeking an LITC grant award for the first time, or a returning clinic whose LITC award period has ended or will end on December 31, 2024, must submit a Full Grant Application to apply for 2025 funding. LITC Full Grant Applications must be submitted electronically via Grants.gov.
2. A returning clinic funded with a multiyear LITC grant that ends after December 31, 2024, must submit an NCC Request. All NCC Requests must be submitted via GrantSolutions at grantsolutions.gov.

When will the Grant be Awarded?

Qualified applicants will receive notification of their selection for the award in October 2024 for the 2025 grant year. Award recipients are expected to attend the Annual LITC Grantee Conference, scheduled for December 2024. This conference offers an invaluable opportunity for new and returning LITCs to connect, exchange best practices, and receive training on tax law topics relevant to low-income and ESL taxpayers.

Contact Information: For any inquiries regarding the LITC Program or the grant application process, you can contact the LITC Program Office by phone at 202-317-4700 (not a toll-free call) or via email at [email protected].

IRS Lists Non-Covered/ Partially Covered Locations

Though the IRS makes an immersive effort to support LITCs in serving low-income taxpayers, there are still many areas that need to be covered by LITCs to serve the taxpayers of those regions. IRS lists the below areas that are either partially covered by any LITCs or completely not covered.

• Florida – Citrus, Hamilton, Hernando, Lafayette, Madison, Nassau, St. Johns, Sumter, Suwannee, Taylor, Brevard, Lake, Orange, Osceola, Seminole and Volusia counties.
• Hawaii – the entire state.
• Kansas – the entire state.
• Montana – Blaine, Broadwater, Carbon, Carter, Custer, Daniels, Dawson, Deer Lodge, Fallon, Fergus, Flathead, Garfield, Golden Valley, Granite, Jefferson, Judith Basin, Lincoln, Madison, McCone, Mineral, Missoula, Musselshell, Petroleum, Phillips, Pondera, Powder River, Powell, Prairie, Richland, Sanders, Sheridan, Stillwater, Sweet Grass, Toole, Treasure, Valley, Wheatland and Wibaux counties.
• Nevada – the entire state.
• North Dakota – the entire state.
• South Dakota – the entire state.
• West Virginia – the entire state.
• The territory of Puerto Rico – the entire country.

IRS Assistance in Application Process

IRS continues to help applicants through various webinars and direct inquiries to guide them in the application process. Questions about the LITC Program or the grant application process can be addressed to the LITC Program Office by email at [email protected]. Alternatively, you may contact Karen Tober by email at [email protected].

The following important dates help organizations navigate the application process.

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 nationwide.  Please get in touch with us for more information.  https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

In Tax Season 2024, the Treasury Department, and the Internal Revenue Service (IRS) have introduced new regulations regarding the corporate stock repurchase excise tax. The stock repurchase excise tax applies to repurchases after Dec. 31, 2022. This move comes amidst increasing scrutiny of stock buybacks and their impact on corporate behavior and economic inequality. Understanding these regulations is essential for both corporations and investors alike, as they could have significant implications for corporate finance strategies and shareholder value.

Negative Impact of Stock Buybacks

Stock buybacks, or share repurchases, occur when a company purchases its outstanding shares from the market, effectively reducing the number of shares available to the public. This practice has become increasingly common in recent years, with corporations often using excess cash or borrowing funds to repurchase shares. Proponents argue that buybacks can signal confidence in a company’s prospects and enhance shareholder value by boosting earnings per share (EPS) and stock prices.

However, critics contend that stock buybacks primarily benefit executives and large shareholders while potentially short-changing investment in research and development, employee compensation, and long-term growth initiatives. Additionally, concerns have been raised about the market manipulation potential of buybacks, as companies may repurchase shares to artificially inflate stock prices.

New Regulations from Tax Season 2024

The new regulations announced by the Treasury and IRS in Tax Season 2024 aim to address some of these concerns by imposing an excise tax on certain corporate stock repurchases. Under these regulations, corporations engaging in substantial stock buybacks could face additional tax liabilities, particularly if the repurchases are deemed excessive or disproportionate relative to other corporate expenditures.

1. Excise Tax Rate

The Inflation Reduction Act has introduced a new excise tax on corporate stock repurchases, set at a rate of 1%. This tax applies to stock repurchases exceeding certain thresholds and is calculated based on the aggregate fair market value (FMV) of repurchased stock relative to the aggregate FMV of stock issued by the corporation during the tax year. While the excise tax rate remains fixed at 1%, it may vary depending on factors such as the size of the repurchase and the company’s financial performance. This measure aims to address concerns surrounding excessive stock buybacks by imposing a tax that corresponds to the extent of repurchase activities, promoting responsible corporate behavior and shareholder value.

2. Exemptions and Thresholds

Certain exemptions and thresholds may apply to smaller stock repurchases or those undertaken for specific purposes, such as employee stock ownership plans (ESOPs) or capital restructuring initiatives. These exemptions aim to avoid penalizing companies for legitimate use of buybacks.

3. Reporting and Compliance Requirements

Corporations will be required to accurately report their stock repurchase activities to the IRS and comply with any additional disclosure requirements. This transparency is crucial for ensuring the effectiveness and integrity of the regulations.

Implications for Corporations

The new regulations are likely to prompt corporations to reassess their stock buyback strategies and capital allocation decisions. Companies will need to weigh the potential tax implications of repurchasing shares against other uses of capital, such as investments in innovation, expansion, or dividends. Additionally, corporate boards and executives may face increased scrutiny from shareholders and regulators regarding the rationale behind stock buybacks and their alignment with long-term value creation. Transparent communication and accountability will be essential in navigating these expectations.

Implications for Investors

For investors, particularly institutional and activist shareholders, the new regulations offer greater transparency and oversight of corporate stock repurchase activities. Investors can use this information to evaluate management’s capital allocation decisions and assess the potential impact on shareholder value. Moreover, the excise tax on stock repurchases could influence investors’ perceptions of companies’ financial health and stewardship. Companies with excessive buyback activity may be viewed less favorably compared to those prioritizing investments in growth opportunities and sustainable value creation.

Compliance and Reporting

Corporations will be required to report their stock repurchase activities accurately to the IRS and comply with additional disclosure requirements. The stock repurchase excise tax must be reported on Form 720, Quarterly Federal Excise Tax Return, with Form 7208 attached. The final version of Form 7208 will be released before the first due date for reporting and payment of the tax.

The due date for Form 720, Quarterly Federal Excise Tax Return, depends on the specific quarter being reported. Generally, Form 720 is due by the last day of the month following the end of the calendar quarter. Here are the due dates for Tax Season 2024.

First Quarter (January – March): The due date is April 30th.

Second Quarter (April – June): The due date is July 31st.

Third Quarter (July – September): The due date is October 31st.

Fourth Quarter (October – December): The due date is January 31st of the following year.

The Treasury and IRS’s new regulations on corporate stock repurchase excise tax represent a significant development in the ongoing debate surrounding stock buybacks and their implications for corporate governance and shareholder value. To file proper excise tax and avoid IRS audits, it is recommended to engage any certified tax professionals that experience in tax implications.

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]

Facing an IRS tax audit can be daunting for any business owner. However, understanding the process and being prepared can alleviate much of the stress. In this guide, we’ll delve into the intricacies of IRS tax audits for businesses, including what triggers them, the procedures involved, and potential outcomes.

What Prompts IRS Audits for Businesses?

There are several reasons why IRS audits are initiated for businesses, which can range from random selection to specific indicators that draw the attention of IRS agents. These triggers are commonly observed.

• Red Flags: The IRS uses computer algorithms to flag returns that deviate from statistical norms, such as unusually high deductions or inconsistencies in reported income.
• Random Selection: Some tax audits are random, chosen by computer selection to ensure compliance across a broad spectrum of taxpayers.
• Industry Standards: Certain industries may face higher scrutiny due to historically higher rates of non-compliance or specific tax issues prevalent in those sectors.
• Large Variances: Significant changes in income or deductions compared to previous years may raise red flags.
• Information Matching: Discrepancies between a business report and what third parties (like clients or financial institutions) report can trigger an audit.

Understanding the Audit Process

The IRS audit process can be complex and intimidating, but understanding the steps involved can help alleviate some of the stress. A simplified overview of the audit process includes the following.

• Notification: The IRS will notify the business either by mail or in person of the audit, specifying the tax year(s) under examination and the documents required.
• Preparation: Gathering relevant financial records, receipts, invoices, and other documentation is crucial. It’s advisable to seek tax professionals’ help from a tax audit representation firm experienced in handling IRS audits.
• Examination: The audit may be conducted via mail correspondence, at the IRS office, or even at the business premises. The IRS examiner will review the records and may request additional documentation or explanations.
• Resolution: After the examination, the IRS will propose adjustments if necessary. The business can agree to the changes, request an appeal, or challenge the findings in tax court.

Potential Outcomes of an IRS Tax Audit

• No Change: In some cases, the IRS may conclude that the business’s return is accurate, resulting in no changes or adjustments.
• Additional Taxes Owed: If discrepancies are found, the IRS may assess additional taxes, penalties, and interest. IRS provided alternatives for taxpayers through its Payment Plans. In case of financial burden, those taxpayers unable to immediately pay their tax debt in full can adopt such IRS Payment Plans.
• Refund: Occasionally, an audit may result in the discovery of overpaid taxes, leading to a refund for the business.
• Settlement: In some instances, the business and the IRS may negotiate a settlement to resolve the audit findings.
• Criminal Investigation: In cases of suspected tax evasion or fraud, an audit may escalate into a criminal investigation, potentially leading to severe penalties or even imprisonment.

Tips for Businesses Facing an IRS Audit

• Stay Organized: Maintain meticulous records of all financial transactions and keep them organized and easily accessible.
• Seek Professional Guidance: Enlist the help of tax professionals who understand the complexities of IRS audits and can represent the business effectively.
• Cooperate with the IRS: Be cooperative and responsive throughout the audit process, providing requested documentation promptly and accurately.
• Know Your Rights: Familiarize yourself with your rights as a taxpayer, including the right to representation and appeal.
• Learn from the Experience: Use the audit as an opportunity to review and improve your business’s tax compliance processes to avoid future issues.

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]

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

[email protected]

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]

A solid grasp of tax laws and regulations is essential for businesses to effectively handle their financial matters. Nevertheless, even with meticulous attention, errors can occur, which may result in complications when it comes to complying with tax laws and regulations.  In a few circumstances, these errors might prompt a tax audit by the Internal Revenue Service (IRS). Failing an IRS audit can result in severe outcomes, such as monetary fines and harm to the organization’s image.  In this article, we’ll explore what could happen if a business fails an IRS audit, highlighting the importance of taking proactive steps to comply with tax rules and seeking help from knowledgeable tax professionals to protect businesses from these challenges.

Financial Consequences

1. Penalties and Fines: Failing an IRS audit can result in hefty penalties and fines. These penalties can be imposed for underreporting income, overstating deductions, or other inaccuracies in tax filings. The financial impact of these penalties can be substantial and may strain the resources of the business.
2. Additional Taxes: Besides penalties, businesses need to pay additional taxes if an audit reveals unreported income or disallowed deductions. These additional tax liabilities and accrued interest can further exacerbate the financial burden on the business.
3. Legal Costs: In cases of serious non-compliance or suspected tax evasion, businesses incur legal costs defending themselves against IRS scrutiny. Legal representation can be expensive, adding to the overall financial strain caused by the audit process.

Reputational Consequences

1. Loss of Trust: Failing an IRS audit can damage a business’s reputation and erode trust among stakeholders, including customers, suppliers, and investors. Public knowledge of non-compliance issues can tarnish the business’s image and undermine its credibility in the marketplace.
2. Negative Publicity: News of an IRS audit or allegations of tax evasion can attract negative publicity, further harming the business’s reputation. Negative media coverage can have lasting effects on consumer perception and may drive away customers and business partners.
3. Regulatory Scrutiny: Failing an IRS audit triggers increased scrutiny from other regulatory bodies, including state tax authorities and industry regulators. This additional scrutiny can disrupt business operations and add further strain to the business’s reputation and resources.

Importance of Proactive Compliance Measures and Professional Representation

1. Maintaining Accurate Records: Businesses need to maintain accurate financial records and documentation to support their tax filings. Proactive record-keeping can help businesses identify and address potential compliance issues before they escalate into audit triggers.
2. Seeking Professional Guidance: Engaging qualified tax professionals from a reputed tax audit representation firm can provide businesses with expert guidance on navigating complex tax laws and regulations. Professional representation during an IRS audit can help businesses present their case effectively and minimize the risk of adverse outcomes.
3. Co-operating with Authorities: Businesses should cooperate fully with IRS auditors and provide requested information promptly. Transparency and cooperation demonstrate a commitment to compliance and may help mitigate penalties and fines.

If you have received notification from the IRS which is usually via. mail for IRS Audit, don’t panic but don’t delay. It is important to read the mail completely and understand the reason stated for the audit, the next step to be taken, or the documents requested by the IRS. To navigate these challenges, it is recommended to engage a tax audit representation firm like the IRS Audit Group.

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]