Patti's Blog - Advocate for Elders, People with Disabilities and Their Families

Unpaid Taxes: Living in Fear of the IRS

Excerpt from: IRS Hitman (click for full article)

 

No matter how large or small the tax debt amount, the IRS has the legal right to place a tax
lien or levy if taxpayers ignore paying their debt. This is why many taxpayers live in fear
of the IRS if they have unpaid taxes. However severe the debt, the IRS does not and cannot
put a lien or a levy before sending preliminary notices regarding the tax debt to taxpayers
explaining the details of the debt and how they can resolve it.

It is only after no effort is made by taxpayers to resolve the tax debt that the IRS sends a
C-90 ‘Final Notice of Intent to Levy’ letter. This is the last IRS notice sent before the IRS
initiates collection actions.
Some of the important facts taxpayers under tax debt must consider are:

• It can take up to a few months before the IRS to place a lien or a levy after the
sending of the first notice regarding tax debt.
• Taxpayers must begin making preparation to pay back the debt after the IRS has taken
notice of the debt and sent a notice to request payment.
• The IRS can and does place a lien or levy if taxpayers ignore or avoid them.

Is the online sales tax bill unstoppable? The House will decide

Excerpt from: Don't Mess with Taxes (click for full article)

 

As expected, the Marketplace Fairness Act breezed through the Senate.

Late Monday (May 6) afternoon, the Senate approved the measure that would require most of the country's online retailers to collect sales tax on purchases based on the rates in the buyer's home city, county and state.

The bill and the subsequent votes -- the procedural one that came earlier to allow yesterday's final passage -- are rare in these usually politically partisan times.

S. 743 was introduced in the Democratically controlled Senate by a Republican, Sen. Mike Enzi, from a conservative western state, Wyoming. However, it received broad bipartisan support.

Sixty-nine senators voted for the bill. Just 27 opposed it. Four didn't vote.

What NOT to Do If You Get an IRS Audit Notice

Excerpt from: US Tax Aid (click for full article)

 

(1) If you get an audit notice, don’t call the IRS, call your CPA.
(2) If you get an audit notice, don’t ignore it. It just gets worse as time goes on.
(3) If your CPA asks you a question, be happy they are paying attention to you. It really is in your best interest, even if it feels annoying at the time.
(4) For me: Make sure our clients understand how we work upfront. We need to know about you and your business. The more we know, the more we can help. If a client isn’t okay with that, it’s not a good fit.

Brown: The IRS Should Report on Tax Returns Filed by Members of Congress

Excerpt from: TaxProf Blog (click for full article)

 

On Friday President and Mrs. Obama released their most recent tax return for the entire world to see.  They continued a longstanding tradition of sitting presidents releasing their returns, even though no law requires that they do so. The tradition began under the late President Richard Nixon. ...

Itemized deductions often come with a hefty price tag. The Joint Committee on Taxation has estimated that for 2013 the amount of revenue lost because of the three deductions the Obamas took (which happen to be among the most popular deductions taken) will be: $90 billion for mortgage interest, $47 billion for charitable contributions, and $46 billion for state and local income taxes. ... One part of the minority that benefits from itemized deductions is members of Congress.

Although Presidents have voluntarily released their tax returns for the last several decades, nothing could be further from the truth when it comes to members of Congress. McClatchy newspapers reported last July that of the 535 members asked to release their most recent tax returns, just 17 did. ... I suspect that if we looked at the tax returns of eavery member of Congress we would see something close to a 100% itemization rate. Compare that to only a third of the American public, and the numbers would suggest that repeal is the best way forward.

Given that I do not expect members of Congress to change their ways, one way to move closer to reform would be for the IRS to issue a new kind of report, which I call the “535 Report.” It would provide in summary fashion the information from the tax returns of all members of Congress.  The 535 Report would be similar in concept to what the IRS currently produces for the tax returns of the 400 highest-income individuals.

No law is needed, because no privacy rights would be violated. All the IRS would have to do would be to crunch the numbers. Then we would know what percent of Congress itemized deductions and what the most popular deductions were. We could then compare the information with what the IRS already produces about the American taxpaying public in general, and hopefully encourage voters to demand change.

David Cay Johnston reported in The New York Times in June 2003 that the 400 report was begun in response to a professor asking for it.  Let’s see if lightening can strike twice.

Can elderly parents deduct care provided by a child?

Excerpt from: Elder Care Matters (click for full article)

 

Question:  "I have elderly parents with multiple health issues, although both are still ambulatory and do not require skilled care or personal care (such as bathing and dressing).  They want to pay me to come over and help them, and I would be willing, but first I need to find out whether they can deduct from their taxable income the amount they pay me for providing this care.  For example, can they itemize these expenses on their tax returns as a medical expense?"

Answer:  Caring for aging parents can be challenging and I commend you for being involved and stepping up.  Based on the information you provided it is difficult to determine whether any payment to you by your parents would be tax deductible.  If you provide strictly personal care services such as meal preparation, housekeeping, laundry or gardening, payment would not be deductible.

However, if you assist them with activities of daily living such as bathing, dressing, eating, getting into and out of a bed, chair, etc. (called transferring), getting to and from the bathroom, or managing continence, the cost of those services may be deductible as qualified long-term care services.  In addition, if your parents need assistance due to memory loss or other severe cognitive disability for their health and safety, this is also a deductible medical expense.

Affordable Care Act Provisions: What you need to know!

Excerpt from: IRS.gov (click for full article)

 

In keeping with the IRS mission of providing America’s taxpayers with top-quality service by helping you understand and meet your tax responsibilities, we will be conducting a phone forum on April 30, 2013 to discuss key provisions of the Affordable Care Act that are currently in effect. These provisions which impact federal, state, and local government employers include:

• W-2 Reporting: Employer Sponsored Health Coverage
• Additional Medicare Tax on High Income Earners

To learn more, we cordially invite you to attend the “ACA Provisions: What you need to know!” Phone Forum.  This forum is tailored for federal, state and local government employers, payroll and benefits administrators.

During this 60 minute presentation we will cover:

• What is included in the cost of coverage (i.e. health, dental/vision, FSA benefits).  
• Additional Medicare Tax: application, calculation, and reporting.

Survival of the Estate Tax May Be Temporary

Excerpt from: Wealth Strategies Journal 2.0 (click for full article)

 

The American Taxpayer Relief Act allowed the Bush-era tax rates to sunset after 2012 for taxpayers with incomes over the $400,000/$450,000 threshold and provides for a maximum estate tax of 40 percent with a 5 million exclusion.  The estate tax, historically targeted for elimination by the Republicans, remains in 2013 with significantly less bite.  Opponents of the tax, claim that the "death tax" penalizes savers, harms growth and interferes with parents' ability to pass wealth.  As fiscal inequality remains during a time when economic growth and deficit reduction demands are being advanced by both the President and Congress, expect a continued trend toward lower taxation of the rich, and lower taxation of estates.

See Kenneth F. Scheve Jr. and David Stasavage, Is the Estate Tax Doomed?, NYTimes.com (March 24, 2013).

Publication: Tax Malpractice Damages in New York

Excerpt from: Wealth Strategies Journal 2.0 (click for full article)

 

In an article entitled New York's Law of Tax Malpractice damages: Balanced or Biased?, Professor of Law Jacob L. Todres discusses the specific elements of damages incurred by plaintiffs who are the victims of negligently rendered tax advice.  The author argues that New York's law denying the recovery of taxes in negligence or legal malpractice cases that would have been mitigated or avoided through proper rendering of tax advice should be re-examined.  In addressing the non-recoverability of interest incurred on tax underpayments, the author discusses recent developments in state law and makes the argument for New York to adopt similar policy.

See Todres: Tax Malpractice Damages in New York, TaxProf Blog (March 13, 2013).

IRS Releases 2012 Data Book

Excerpt from: Wealth Strategies Journal 2.0 (click for full article)

 

The Internal Revenue Service has recently released the 2012 IRS Data Book, which provides an overview of the Service's initiatives for the fiscal year.  The publication examines data from October 1, 2011 - September 30, 2012, providing a source of information about returns filed, taxes collected, refunds issued, examinations conducted, penalties imposed and investigations conducted. To view an electronic version of the publication, visit http://www.irs.gov/pub/irs-soi/12databk.pdf 

See 2012 IRS Data Book, TaxProf Blog (March 26, 2013).

Top Ten Tips on Making IRA Contributions

Excerpt from: IRS.gov (click for full article)

 

The IRS has 10 important tips for you about setting aside money for your retirement in an Individual Retirement Arrangement.

1. You must be under age 70 1/2 at the end of the tax year in order to contribute to a traditional IRA.
   
   
2. You must have taxable compensation to contribute to an IRA. This includes income from wages, salaries, tips, commissions and bonuses. It also includes net income from self-employment. If you file a joint return, generally only one spouse needs to have taxable compensation.
   
   
3. You can contribute to your traditional IRA at any time during the year. You must make all contributions by the due date for filing your tax return. This due date does not include extensions. For most people this means you must contribute for 2012 by April 15, 2013. If you contribute between Jan. 1 and April 15, you should contact your IRA plan sponsor to make sure they apply it to the right year.
   
   
4. For 2012, the most you can contribute to your IRA is the smaller of either your taxable compensation for the year or $5,000. If you were 50 or older at the end of 2012 the maximum amount increases to $6,000.