Individuals who need passports for imminent travel should contact IRS promptly to resolve tax debt

According to the IRS:

WASHINGTON ― The Internal Revenue Service today reiterated its warning that taxpayers may not be able to renew a current passport or obtain a new passport if they owe federal taxes. To avoid delays in travel plans, taxpayers need to take prompt action to resolve their tax issues.

In January of last year, the IRS began implementing new procedures affecting individuals with “seriously delinquent tax debts.” These new procedures implement provisions of the Fixing America’s Surface Transportation (FAST) Act. The law requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt, which is $52,000 or more. The law also requires State to deny their passport application or renewal. If a taxpayer currently has a valid passport, the State Department may revoke the passport or limit ability to travel outside the United States.

When the IRS certifies a taxpayer to the State Department as owing a seriously delinquent tax debt, they receive a Notice CP508C from the IRS. The notice explains what steps a taxpayer needs to take to resolve the debt. Please note, the IRS doesn’t send copies of the notice to powers of attorney. IRS telephone assistors can help taxpayers resolve the debt, for example, they can help taxpayers set up a payment plan or make them aware of other payment alternatives. Taxpayers shouldn’t delay because some resolutions take longer than others, such as adjusting a prior tax assessment.

When a taxpayer no longer has a seriously delinquent tax debt, because they paid it in full or made another payment arrangement, the IRS will reverse the taxpayer’s certification within thirty days. State will then remove the certification from the taxpayer’s record, so their passport won’t be at risk under this program. The IRS can expedite the decertification notice to the State Department for a taxpayer who resolves their debt, has a pending passport application and has imminent travel plans or lives abroad with an urgent need for a passport.

A taxpayer with a seriously delinquent tax debt is generally someone who owes the IRS more than $52,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy.

Before denying a passport renewal or new passport application, the State Department will hold the taxpayer’s application for 90 days to allow them to:

Resolve any erroneous certification issues,
Make full payment of the tax debt, or
Enter a satisfactory payment arrangement with the IRS.
Ways to Resolve Tax Issues
There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

Paying the tax debt in full,
Paying the tax debt timely under an approved installment agreement,
Paying the tax debt timely under an accepted offer in compromise,
Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
Having requested or have a pending collection due process appeal with a levy, or
Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.
Relief programs for unpaid taxes
Frequently, taxpayers qualify for one of several relief programs including the following:

Payment agreement. Taxpayers can ask for a payment plan with the IRS by filing Form 9465. Taxpayers can download this form from IRS.gov and mail it along with a tax return, bill or notice. Some taxpayers can use the online payment agreementto set up a monthly payment agreement.

Offer in compromise. Some taxpayers may qualify for an offer in compromise, an agreement between a taxpayer and the IRS that settles the tax liability for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to decide the taxpayer’s ability to pay. Taxpayers can use the Offer in Compromise Pre-Qualifier tool to help them decide whether they’re eligible for an offer in compromise.
Subject to change, the IRS also will not certify a taxpayer as owing a seriously delinquent tax debt or will reverse the certification for a taxpayer:

Who is in bankruptcy,
Who is deceased,
Who is identified by the IRS as a victim of tax-related identity theft,
Whose account the IRS has determined is currently not collectible due to hardship,
Who is located within a federally declared disaster area,
Who has a request pending with the IRS for an installment agreement,
Who has a pending offer in compromise with the IRS, or
Who has an IRS accepted adjustment that will satisfy the debt in full.
For taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department of the delinquency and the taxpayer’s passport is not subject to denial during the time of service in a combat zone.

For more on these procedures and the law visit IRS.gov. The IRS first announced this matter in IRS news release IR-2018-7 on Jan. 16, 2018.

 

https://www.irs.gov/newsroom/individuals-who-need-passports-for-imminent-travel-should-contact-irs-promptly-to-resolve-tax-debt?inf_contact_key=1ebde80919088bd1769c48fb018d2746680f8914173f9191b1c0223e68310bb1

IRS warning: Don’t be a victim of ‘ghost’ tax return preparers

According to the IRS:

https://www.irs.gov/newsroom/irs-warning-dont-be-a-victim-of-ghost-tax-return-preparers?inf_contact_key=1c9a49e42c4b6e18d187fe8b99fe8cfc680f8914173f9191b1c0223e68310bb1

 

WASHINGTON ― The Internal Revenue Service is cautioning taxpayers to avoid the dangers of “ghost” tax return preparers.

According to the IRS, a ghost preparer is paid to prepare a tax return, but does not sign it, either electronically or on paper, as the paid preparer. These phantom preparers who won’t put their name on the tax return are a warning sign for taxpayers of a potential scam.

Here’s how it works. The ghost preparer can print the paper return for their client and tells them to sign and mail it to the IRS. Or, for electronically-filed returns, they will prepare it but won’t digitally sign it as the paid preparer. By doing so, the tax return appears to be self-prepared, with no indication that a paid tax preparer was used in completing the tax return — helping keep the return preparer under the radar.

By law, anyone who prepares or assists in preparing federal tax returns for compensation must have a valid 2018 Preparer Tax Identification Number, or PTIN, before preparing any tax return. Tax preparers should sign the tax returns they prepare on paper and include their PTIN on the tax return, which provides the IRS with their identifying information. A paid tax preparer who prepares more than 10 tax returns is also generally required to e-file those returns. In this case, the preparer would digitally sign the tax return.

For 2018, the IRS has issued more than 737,000 PTINs to tax preparers.

Dishonest and unscrupulous tax preparers, including some who are “ghost” tax preparers, perpetuate refund fraud and scams that hurt honest taxpayers who are simply trying to do the right thing and file a legitimate tax return. Dishonest preparers look to make a fast buck by promising a big refund, sometimes charging fees based on a percentage of the refund. These shady preparers may also:

Require payment in cash only and not provide a receipt.
Invent income to erroneously qualify their clients for tax credits or claim fake deductions to enable the taxpayer to get a larger refund.
Direct refunds into their own financial account rather than the taxpayer’s account.
The IRS urges taxpayers to review their tax return carefully and ask questions if something is not clear before they sign and file it with the IRS. They should ensure they are comfortable with the accuracy of their tax return. And for any direct deposit refund, taxpayers should make sure both the routing and bank account number on the completed tax return are correct.

Taxpayers can report abusive tax preparers to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

To find a tax preparer, taxpayers can visit the IRS preparer directory at www.irs.gov/chooseataxpro. Remember: Taxpayers are legally responsible for what is on their tax return even if someone else prepares it.

 

Your IRS Questions Answered Here:

Question: I received a Notice of Federal Tax Lien via certified mail for unpaid back taxes and I’m scared and don’t know what to do.  Can you help?

Answer: Yes. A Notice of Federal Tax Lien (NFTL) is public record and is generally filed with the County Recorder where you reside.  A federal tax lien will also negatively impact your credit report scores.  It is notice to all your other creditors that the IRS has a secured interest in all your real and personal property you have now and acquired in the future.

A federal tax lien will make it very difficult, if not impossible, for you to purchase a home, vehicle and other property on credit.  It may also prevent you from accessing the equity in real property you may have built up over the years.  However, the IRS has several different solutions that can resolve your NFTL if you qualify.   You can resolve a federal tax lien by paying it in full or if that is not an option you can find out if you qualify for a “Release of Lien”, a “Lien Subordination”, a Lien Discharge” or “Lien Withdrawal”.  It is important to keep in mind that IRS problems didn’t just happen overnight and will take some time to resolve.  The good news is that generally you won’t have to meet or even speak with the IRS while we’re retained.   It’s important to consult with a tax resolution professional to see which Lien relief solutions you may be eligible for before the IRS starts enforcing aggressive collection action against you. We can help protect what you have and preserve your rights!!

IRS Fun Fact

Richard Nixon’s tax return showed an income of $200,000, and in 1970 paid $792.81 in federal income tax and $878.03 in 1971, with deductions of $571,000 for donating “vice-presidential papers.

IRS Dirty Dozen Scams

The Internal Revenue Service today wrapped up issuing its annual “Dirty Dozen” list of tax scams. The IRS reminds taxpayers to remain vigilant to these often aggressive and evolving schemes throughout the year.

Phishing: Taxpayers should be alert to potential fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or tax refund. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information. (IR-2019-26)

Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things. (IR-2019-28)

Identity Theft: Taxpayers should be alert to tactics aimed at stealing their identities, not just during the tax filing season, but all year long. The IRS, working in conjunction with the Security Summit partnership of state tax agencies and the tax industry, has made major improvements in detecting tax return related identity theft during the last several years. But the agency reminds taxpayers that they can help in preventing this crime. The IRS continues to aggressively pursue criminals that file fraudulent tax returns using someone else’s Social Security number. (IR-2019-30)

Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. There are some dishonest preparers who operate each filing season to scam clients, perpetuate refund fraud, identity theft and other scams that hurt taxpayers. (IR-2019-32)

Inflated Refund Claims: Taxpayers should take note of anyone promising inflated tax refunds. Those preparers who ask clients to sign a blank return, promise a big refund before looking at taxpayer records or charge fees based on a percentage of the refund are probably up to no good. To find victims, fraudsters may use flyers, phony storefronts or word of mouth via community groups where trust is high. (IR-2019-33)

Falsifying Income to Claim Credits: Con artists may convince unsuspecting taxpayers to invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers should file the most accurate tax return possible because they are legally responsible for what is on their return. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties. (IR-2019-35)

Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their tax returns to pay less than what they owe or potentially receive larger refunds. Think twice before overstating deductions, such as charitable contributions and business expenses, or improperly claiming credits, such as the Earned Income Tax Credit or Child Tax Credit. (IR-2019-36)

Fake Charities: Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally-known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. (IR-2019-39)

Excessive Claims for Business Credits: Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities or satisfy the requirements related to qualified research expenses. (IR-2019-42)

Offshore Tax Avoidance: Successful enforcement actions against offshore cheating show it’s a bad bet to hide money and income offshore. People involved in offshore tax avoidance are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities. (IR-2019-43)

Frivolous Tax Arguments: Frivolous tax arguments may be used to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims about the legality of paying taxes despite being repeatedly thrown out in court. The penalty for filing a frivolous tax return is $5,000. (IR-2019-45)

Abusive Tax Shelters: Abusive tax structures including trusts and syndicated conservation easements are sometimes used to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. (IR-2019-47)

Massachusetts Couple Could Face Long Prison Term

Gary DeCicco and Pamela Avedisian of Nahant, MA, were charged with multiple felonies, including two counts of tax evasion, one count of conspiracy to commit bank fraud, four counts of wire fraud and six counts of engaging in unlawful monetary transactions.

Between April 2012 and February 2013, DeCicco told the IRS that he did not have the ability to pay his more than $340,000 tax liability.  He repeatedly claimed he had very little cash, no vehicles or real properties during that time.

According to the IRS, he had ownership of several businesses, vehicles and real estate, titled to other entities to conceal his ownership from the IRS.

Originally, the IRS accepted a monthly installment plan based on false information.  During that time, DeCicco allegedly bought and sold numerous real properties, boats, luxury cars, concealing the sales with the help of Avedisian.

The couple could face up to 5 years in prison for each count of tax evasion, up to 30 years for wire fraud and conspiracy to commit bank fraud, and up to 20 years for unlawful monetary transactions consecutively, as well as supervised release and monetary fines and penalties.

Attorney and GOP Power Broker Has Champagne Taste but Claims a Beer Budget

George Gilmore, one of the most powerful figures for the GOP in New Jersey, was indicted in Jan. 2019 on six federal tax-related counts.

Gilmore, an attorney at the firm Gilmore & Monahan, which had $2 million in public contracts across the state in 2017, was charged with tax evasion, filing false tax returns, failing to collect, account for, and pay payroll taxes, and making false statements on a bank loan application. Gilmore is also chairman of the Orange County GOP and the county Board of Elections.

According to the indictment, while Gilmore owed the IRS more than $1.5 million in taxes, penalties and interest, rather than paying that debt he spent more than $2.5 million on personal expenses.  Between January 2014 and December 2016, Gilmore spent $380,000 to remodel his waterfront home in Toms River, including an infinity pool and cabana; $440,000 on antiques, artwork and collectables including animal tusks; $20,000 on a Steinway piano and $80,000 on model trains. In order to hide the personal expenses, Gilmore classified the payments as “shareholder loans.”  He did send one check to the IRS for $500,000 but that check bounced as there was less than $2,500 in the account.

Kevin Marino, Gilmore’s attorney said, “George Gilmore faithfully reported every penny of his income, and repeatedly expressed his intention to pay his taxes together with interest and penalties, freely conceded that he was unable to do so in a timely fashion, and share with the government the reasons why, and disclosed that he suffers from “hording disorder.”

Gilmore could face a potential decades-long prison sentence and fines between $250,000 and $1 million.

If You Owe It, and You Have It, You Must Pay It

An independent contractor from Tulsa, Ok, John Petrig, pled guilty in Federal Court to one count of tax evasion.

Petrig worked installing ATM machines inside casinos.  His company paid him a commission based on the number of transactions executed at the ATMs.  On his 2015 tax return, Petrig showed an income of $394,317 but failed to pay the $110,372 in taxes owed.

In 2012, the Internal Revenue Service sent a notice of levy to Petrig’s employer, stating that any commissions earned be sent to the IRS to pay his tax debt.  In turn, Petrig sent a letter to his employer directing that all future commissions be paid to a fictitious corporation he set up.

U.S. Attorney Trent Shores states, “The federal income tax system is based upon the compliance of the taxpaying citizens of this nation.  When an individual, such as Mr. Petrig, decides to shirk his responsibility to pay what he owes, then other law-abiding citizens end up shouldering the burden. Mr. Petrig’s criminal acts cost taxpayers not only the loss of unpaid taxes, but also the additional expense for investigating and prosecuting his criminal behavior.”

Petrig faces a maximum sentence of 5 years prison time, a fine up to $250,000, or both, and up to three years supervised release.

Don’t Mess with the IRS’ Criminal Investigation Division

A fact that is little known to the public, the IRS has a large inventory of weapons. An official report says that at the end of 2017, the tax agency has 4,487 guns and 5,062,006 rounds of ammunition, including 15 fully automatic firearms, which only the Criminal Investigation Division is authorized to carry.

According to an audit report from the Treasury Inspector General for Tax Administration, from 2009 to 2011, IRS agents accidentally discharged their guns 11 times during that time.  The report also stated that the IRS agents fired their guns accidentally more times than they did intentionally. Some of the misfires caused property damage or personal injury.

In a 30-page report issued on July 30, 2018, from the Treasury Inspector General for Tax Administration, the, “Criminal Investigation’s Firearms Training and Qualification Oversight Needs to Be Improved”, included policies on weaponless control, intermediate weapon control and the use of deadly force.

Open the Books, a project of the nonprofit organization American Transparency found that the IRS spent nearly $11 million on guns, ammunition and military-style equipment in 2006-2014.

The IRS Throws a Wrench in Mechanic’s Plan

Albert Strong, a North Carolina mechanic, was sentenced to 36 months in prison for wire fraud and filing a false income tax return after pleading guilty to the charges in April, 2018.

Strong worked as a mechanic/machinist at a company in Charlotte. From 2008 to 2015, Strong embezzled more than $1,488,000 from the company using a fraudulent purchasing and billing scheme.  Using a fake parts vendor, Strong would order fictitious parts from the vendor, creating false invoices and submitting them to the company.

The conviction was based on Strong not reporting his embezzled funds on his 2009-2015 tax returns.  The loss to the IRS was approximately $450,000.

In addition to jail time, Strong was also ordered to serve two years supervised release and pay restitution in the amount of $1,941,377.32