Monday, June 30, 2008

Stimulus....where are they going now?

Just when you thought the disbursement of stimulus checks was going to go smoothly, the US Treasury Department intercedes. According to USA Today, about $2 billion in economic stimulus rebate checks are being confiscated to pay overdue bills for child support, student, student loans and back taxes. According to the government, about 1.8 million rebate checks have been intercepted by the Treasury Department, showing where individuals owe money to federal or state governments.
The people who benefit the most from this are those that are owed child support. But just to note, the Internal Revenue Service has mailed 77 million checks worth $64 million more than half the expected total. However, before a stimulus check is sent out a weekly lists of delinquent Americans that owe money is given to the Treasury Department.
All and all, this is a nice bonus for the families and children who need and deserve it the most. According to Mike Adams, head of child support at the Tennessee Department of Human Resources, his state has received $8.5 million of expected for unpaid child support,
Taxpayers are however notified, explaining why they got a reduced payment or none at all.Consequently, the diverted money is sent directly to the family or government agency to which is owed.
In my opinion, this type of action should be mandatory at the end of every tax year. What a great way to give back to those who have gone without for so long !

Wednesday, June 11, 2008

What To Do If You Receive A Notice From The IRS

It’s a moment many taxpayers dread. A letter arrives from the IRS — and it’s not a refund check. Don’t panic; many of these letters can be dealt with simply and painlessly.
Each year, the IRS sends millions of letters and notices to taxpayers to request payment of taxes, notify them of a change to their account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return. Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry.
If you receive a correction notice, you should review the correspondence and compare it with the information on your return.
Agree? If you agree with the correction to your account, usually no reply is necessary unless a payment is due.
Disagree? If you do not agree with the correction the IRS made, it is important that you respond as requested. Write to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.
Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to help us respond to your inquiry.
Be sure to keep copies of any correspondence with your records.
For more information about IRS notices and bills, see Publication 594, What You Should Know about the IRS Collection Process. Information about penalties and interest charges is available in Publication 17, Your Federal Income Tax. Both publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is http://www.irs.gov/.

Be Careful Who Files Your Taxes

Return preparer fraud generally involves the preparation and filing of false income tax returns by preparers who claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients. This includes inflated requests for the special one-time refund of the long-distance telephone tax. Preparers may also manipulate income figures to obtain tax credits, such as the Earned Income Tax Credit, fraudulently.
In some situations, the client (taxpayer) may not have knowledge of the false expenses, deductions, exemptions and/or credits shown on their tax returns. However, when the IRS detects the false return, the taxpayer — not the return preparer — must pay the additional taxes and interest and may be subject to penalties.
The IRS Return Preparer Program focuses on enhancing compliance in the return-preparer community by investigating and referring criminal activity by return preparers to the Department of Justice for prosecution and/or asserting appropriate civil penalties against unscrupulous return preparers.
While most preparers provide excellent service to their clients, the IRS urges taxpayers to be very careful when choosing a tax preparer. Taxpayers should be as careful as they would be in choosing a doctor or a lawyer. It is important to know that even if someone else prepares a tax return, the taxpayer is ultimately responsible for all the information on the tax returns

Tuesday, June 10, 2008

Interest Rate Drops For Third Quarter 2008

The Internal Revenue Service today announced that interest rates for the calendar quarter beginning July 1, 2008, will drop by one percentage point. The new rates will be:
five (5) percent for overpayments [four (4) percent in the case of a corporation];
five (5) percent for underpayments;
seven (7) percent for large corporate underpayments; and
two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during April 2008.

Who May Use The Taxpayer Advocate Service?

The Taxpayer Advocate Service is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. You may be eligible for Taxpayer Advocate Service assistance if:

You are experiencing economic harm or significant cost (including fees for professional representation),
You have experienced a delay of more than 30 days to resolve your tax issue, or
You have not received a response or resolution to the problem by the date that was promised by the IRS.
The service is free, confidential, tailored to meet your needs, and is available for businesses as well as individuals. There is at least one Local Taxpayer Advocate in each state, as well as in Puerto Rico and the District of Columbia. Because they are part of the IRS, Advocates know the tax system and how to navigate it. If you qualify, you will receive personalized service from a knowledgeable Advocate who will:

Listen to your situation,
Help you understand what needs to be done to resolve it, and
Stay with you every step of the way until your problem is resolved.
Contact the Taxpayer Advocate Service.