The steps –– an expansion of efforts that began more than a year ago –– include additional flexibility on offers in compromise for struggling taxpayers, a series of Saturday “open houses” offering taxpayers extra opportunities to work out tax problems face to face with the IRS, special outreach with partner groups to unemployed taxpayers and the availability of more information on a special section of the IRS Web site.

“Times are tough for many people, and the IRS wants to do everything it can to help people who have lost their job or face financial strain,” IRS Commissioner Doug Shulman said. “We continue to make adjustments to key programs and expand ways for people to get help. We’re doing everything we can to help ease the burden on struggling taxpayers.”

New Flexibility for Offers in Compromise

For some taxpayers, an offer in compromise –– an agreement between a taxpayer and the IRS that settles the taxpayer’s debt for less than the full amount owed –– continues to be a viable option. IRS employees will now have additional flexibility when considering offers in compromise from taxpayers facing economic troubles, including the recently unemployed.

Specifically, IRS employees will be permitted to consider a taxpayer’s current income and potential for future income when negotiating an offer in compromise. Normally, the standard practice is to judge an offer amount on a taxpayer’s earnings in prior years. This new step provides greater flexibility when considering offers in compromise from the unemployed. The IRS may also require that a taxpayer entering into such an offer in compromise agree to pay more if the taxpayer’s financial situation improves significantly.

These immediate steps are part of an on-going effort by the IRS to ensure the availability of the Offer in Compromise program for taxpayers.

Hundreds of Saturday Open Houses to Resolve Taxpayer Issues

In addition, IRS will hold hundreds of special Saturday open houses to give struggling taxpayers more opportunity to work directly with IRS employees to resolve issues. The offices will be open on March 27 and three additional Saturdays in the spring and early summer. Dates, times and locations will be announced shortly.

During the expanded Saturday hours, taxpayers will be able to address economic hardship issues they may be facing or get help claiming any of the special tax breaks in last year’s American Recovery and Reinvestment Act, including the:

• Homebuyer tax credit
• American Opportunity Credit
• Making Work Pay credit
• Expanded Earned Income Tax Credit

In addition to these special Saturdays, taxpayers can take advantage of toll-free telephone assistance and regularly scheduled hours at local Taxpayer Assistance Centers. Taxpayers can find the location, telephone number and business hours of the nearest assistance center by visiting the Contact My Local Office page on IRS.gov.

Special Outreach Efforts to Unemployed

The IRS is working and coordinating with state departments of revenue and state workforce agencies to help taxpayers who are having problems meeting their tax liabilities because of unemployment or other financial problems.

These coordinated efforts may include opportunities for taxpayers to make payment arrangements and resolve both federal and state tax issues in one place.

Special Section of IRS.gov Created

Taxpayers who are unemployed or struggling financially can find information on a new page on the IRS Web site, IRS.gov. This online tax center has numerous resources including links to information on tax assistance and relief to help struggling taxpayers

Other Options Available for Taxpayers

The IRS will continue to offer other help to taxpayers, including:

• Assistance of the Taxpayer Advocate Service for those taxpayers experiencing particular hardship navigating the IRS.
• Postponement of collection actions in certain hardship cases.
• Added flexibility for missed payments on installment agreements and offers in compromise for previously compliant individuals having difficulty paying.
• Additional review of home values for offers in compromise in cases where real-estate valuations may not be accurate.
• Accelerated levy releases for taxpayers facing economic hardship.

In addition, the IRS will accelerate lien relief for homeowners if a taxpayer cannot refinance or sell a home because of a tax lien. As previously announced, a taxpayer seeking to refinance or sell a home may request the IRS make a tax lien secondary to the lien by the lending institution that is refinancing or restructuring a loan. The taxpayer may also request the IRS discharge its claim if the home is being sold for less than the amount of the mortgage lien under certain circumstances.

IRS watchdogs are investigating more than 70 reported instances of inappropriate comments made to agency workers by taxpayers, union officials said earlier this week.

Despite earlier reports suggesting it was 70 actual threats, National Treasury Employees Union President Colleen M. Kelley clarified on Wednesday that workers have received a mix of inappropriate comments — including jokes or statements of support for pilot A. Joseph Stack III — and more serious threats. Kelley said she learned of the threats from the Treasury Inspector General for Tax Administration, which tracks threats against IRS workers.

Neither TIGTA nor the IRS would confirm an actual number of threats or share details of ongoing investigations.

“TIGTA is actively and aggressively investigating all threats made against IRS employees, infrastructure and property,” said J. Russell George, the treasury inspector general for tax administration.

IRS workers are instructed to report threats made against them to TIGTA immediately. The watchdog has established a toll-free hotline, e-mail address and internal messaging system for workers to quickly report potential threats.

“It would be a little naïve to think that we don’t get some threats over the course of doing business,” said IRS Communications Director Terry Lemons.

As The Eye has reported previously, attacks and threats against IRS workers and facilities happen frequently and are not confined to the annual tax filing season. The most recent attack at the Austin offices comes amid a wave of attacks at government and military facilities in the last six months.

Source

The best thing to do is file your taxes by using a 2006 Form 1040. Yes, sometimes good things can happen. The average refund is approximately $800.

The refunds are owed in every state, as well as residents of U.S. territories and military personnel who didn’t file returns in 2006. California is home to the most taxpayers, almost 160,000, who didn’t send in returns. It accounts for $151 million of the total.

In addition to the regular refund amount, a 2006 return will get most taxpayers at least $30 and possibly up to $60 in extra cash back from the government. This money is courtesy of the repealed Telephone Excise Tax Refund. It was paid out based on the number of exemptions taxpayers claimed on their 2006 returns.

Read More

The $200 million government stimulus program aims to create jobs in Florida by paying for up to 95 percent of the salaries of employees who meet federal low-income guidelines and have a dependent child at home.

The Florida Agency for Workforce Innovation is offering the program in partnership with the Florida Department of Children and Families, Workforce Florida and regional workforce boards.

The funding will allow the workforce boards to finalize agreements with businesses to hire and train employees, according to a news release. Distribution of the remaining funds will follow.

Crist has been hosting ceremonial bill-signing ceremonies today in Tampa, Tallahassee, Orlando, Fort Myers and Miami to promote House Bill 7033. The Florida Legislature passed the bill on the first day of the legislative session, with the governor signing it into law the same day.

The bill changes the taxable wage base, which is used to calculate unemployment taxes, to $7,000 from $8,500 for two years.

The collected funds pay for 26-week state unemployment benefits.

The wage base is slated to increase to $8,500 in 2012 and revert to $7,000 in 2015.

The bill also allows employers to pay 2010 and 2011 unemployment compensation taxes in quarterly installments without interest or penalties, as long as the employers adhere to a schedule.

Source

More than 1.4 million Americans were audited last year, the most in a decade. Even more audits are expected as the Obama administration plans to spend $8.2 billion in tax enforcement initiatives in 2011, a nearly 10% increase over last year.

Being meticulous with your tax return may seem obvious, but many people aren’t careful enough. And with the IRS seeking to collect every penny it can this year, you could end up paying for even the smallest mistakes.

While the IRS doesn’t reveal its secret formula for flagging returns, here are some tips to avoid popping up on the auditor’s radar.

Self-employed? Prove it’s legit

With a record-high jobless rate, many Americans have turned to self employment, making the IRS increasingly skeptical of the legitimacy of home-based businesses, said Robert Willens, a professor of taxation at Columbia Business School and president of Robert Willens LLC, a tax consulting firm.

More people are trying to turn hobbies into businesses in order to bring in a little extra money, but this won’t fool the IRS. In order to prove your business is legit, you need to keep consistent and accurate records of income and expenses, said Willens.

To be even safer, he suggests maintaining a separate bank account for the business, registering the business with the proper authorities and hiring an attorney and a good tax accountant.

An activity is considered a for-profit business if the gross income for any three of the most recent five years exceeds the deductions taken for the activity. If the IRS determines that a business is not engaged in for-profit, you won’t be allowed to take deductions of more than the gross income from that activity, said Willens.

High expenses of self-employed individuals will also provoke suspicion from the auditor, who will look closely at travel, entertainment and automobile expenses relative to an individual’s income.

Overseas bank accounts? ‘Fess up

As the government cracks down on offshore bank accounts, deposits abroad are likely to catch an auditor’s eye this year.

While the IRS will spend most of its resources going after people with the largest deposits, all taxpayers with foreign accounts should take precaution and comply with the rules in order to avoid huge penalties, said Maureen McGetrick, a tax partner with BDO Seidman.

“Foreign bank accounts have been all over the press lately — it’s definitely a big thing this year,” said McGetrick.

“People need to make sure they indicate on their tax returns if they have one, and make sure they include any interest income from that bank account on their returns,” McGetrick says. If you’re required to file a U.S. tax return, you must report foreign bank deposits that exceed $10,000 at any point during the year on form 90-22.1.

More

Amazon.com Inc. (NASDAQ: AMZN) ‎ has a national network of bloggers and Internet-based businesses that generate commissions themselves by driving sales from links on their websites to Amazon.com

The Colorado Legislature passed a law that, starting March 1, requires retailers to notify purchasers how much money they owe from Colorado’s 2.9 percent state sales tax when their purchase originates from a business based in the state. Retailers are also supposed to pass that information to the state so it can collect the revenue.

Bloggers began posting copies of the Amazon.com letter, which said the company will continue to sell to Colorado residents online but will not longer market through online Colorado affiliates.

“We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through associates based in other states,” concluded the letter, as posted by tech blogger Nat Torkington.

Colorado Gov. Bill Ritter — who signed the Internet tax bill into law — issued a statement Monday criticizing Amazon.com’s move.

“Amazon has taken a disappointing – and completely unjustified – step of ending its relationship with associates,” Ritter said. “While Amazon is blaming a new state law for its action, the fact is that Amazon is simply trying to avoid compliance with Colorado law and is unfairly punishing Colorado businesses in the process.

“My office worked closely with Amazon’s affiliates and associates to modify House Bill 1193 to specifically protect small businesses, avoid job losses and provide a fair, level playing field for on-line retailers and Main Street, brick-and-mortar retail shops alike,” Ritter added. “Amazon’s position is unfortunate, and Coloradans certainly deserve better.”

Amazon.com’s reaction may have come as something of a surprise.

Affiliate marketing businesses in Colorado succeeded in getting an amendment to the original version of the bill, which could have made online business directly responsible for the tax. The affiliate marketing victory crowed about the amendment as a victory.

But now, with several other states debating laws applying sales taxes to affiliate sales, it appears Amazon.com isn’t happy about the measure.

The company has not responded to Denver Business Journal requests for comment.

Source

“Professionals who demonstrate a lack of respect for our tax system by failing to meet their own tax filing obligations should not expect to retain the privilege to practice before the IRS,” said Karen L. Hawkins, Director of the IRS Office of Professional Responsibility (OPR).

The OPR had originally sought the 48-month suspension, alleging Kilduff’s conduct was willful and disreputable. OPR enforces standards of conduct under Treasury Circular 230, which governs enrolled agents, attorneys and certified public accountants. Kilduff formerly worked for the IRS Office of Chief Counsel.

The Administrative Law Judge (ALJ) subsequently set the penalty at a 24-month suspension. Kilduff appealed the ALJ decision to the Secretary of the Treasury’s Appellate Authority, which in fact ultimately imposed the harsher 48-month suspension.

Kilduff’s suspension is for a minimum of 48 months. OPR has sole discretion regarding his reinstatement to practice before the IRS. At the very least, Kilduff must file all federal returns and pay all taxes he is responsible for, or enter an acceptable installment agreement or offer in compromise.

The complete decisions of the ALJ and the Appellate Authority are available on the OPR page on this web site.

Source

A long-time plea by Ottawa technology magnate Terence Matthews and industry lobbyists was answered when the government cancelled Section 116 of the Income Tax Act, which forces foreign investors to file Canadian returns when they sell investments.

“At a minimal cost to the government, this amendment will have an immediate, positive and direct impact on Canada’s ability to grow a robust Canadian technology industry,” Matthews said in a release. “By sending a clear message to international investors that Canada is ‘open for business,’ the government will make Canadian companies more attractive to foreign investors overnight.”

Matthews recently announced he was seeking investors for a $200-million investment fund to promote development of new companies.

Venture capital investment fell 27 per cent last year across Canada to $1 billion, the lowest in 13 years. Just $90 million was raised by Ottawa companies, half the amount they raised in 2008.

The funding crash is part of a global problem, with venture investment at a low ebb.

The government said the move would “eliminate the need for tax reporting (and help) high-growth companies to attract foreign venture capital.”

As reflects a government trying to reduce a big deficit, there was no significant pump-priming for funding programs that have helped many tiny companies survive the investment crash. Instead, the government put new money into a few key technology areas and promised to improve the efficiency of administration of $4 billion in investment tax credits.

The budget put $35 million over two years into the search for new sources of medical isotopes in the wake of repeated shutdowns at a Chalk River AECL reactor and other old reactors around the world, which have hit patients and hospitals around the world.

The TRIUMF nuclear cyclotron in Vancouver receives $126 million over five years to drive more research.

The budget puts another $135 million into a National Research Council regional innovation clusters program, which funds private- and public-sector collaboration in 11 clusters across the country.

However, there was no new funding for the NRC Industrial Research Assistance Program, which helps many tiny companies stay afloat.

Unlike fresh venture capital investments by Quebec, Ontario and other governments, there was was no extra funding in this budget for Business Development Canada to invest in new companies.

The budget promises to speed processing of scientific research and experimental development tax incentives, which are vital to many technology companies.

Russ Roberts, a spokesman for the Canadian Advanced Technology Alliance, said the budget, for the first time, recognized there was a productivity gap in the Canadian manufacturing and services sectors, holding back growth. “We are pleased to see that they now have the issue in focus, but we want to see the plan for addressing the issue.”

The Information Technology Association of Canada said the budget was short on specifics to back a promise of creating a new digital economy. The only new program it could find was $40 million for federal agencies to use and demonstrate innovative technology developed by small and medium-sized firms.

The Section 116 tax rule has long been an issue because it requires U.S. venture capital investors to file individual Canadian tax returns when they sell Canadian investments.

Source

IRS Commissioner Doug Shulman and SEC Chairman Mary Schapiro today signed a Memorandum of Understanding designed to improve compliance with IRS and SEC rules and regulations related to municipal securities. The muni bond market currently totals about $2.8 trillion in outstanding securities and continues to grow in complexity and size.

“This memorandum reflects the commitment both agencies have in using all means possible to ensure the municipal bond market operates in accordance with all the laws that govern it,” Shulman said.

“Through cooperative relationships like this, we are better positioned to protect investors and ensure they are getting the information they need when investing in municipal securities,” Schapiro said.

The IRS and SEC will work cooperatively to identify issues and trends related to tax-exempt bonds in the municipal securities industry and to develop strategies to enhance performance of their respective regulatory responsibilities. To support this effort, the two agencies will work through a standing Tax Exempt Bond/Municipal Securities Committee to discuss policy, procedures and compliance issues.

The IRS and SEC will also share information as appropriate regarding market risks, practices and events related to municipal securities, among other things. In addition, the two agencies will collaborate on educational and other types of outreach efforts.

It should reach Gov. Tim Pawlenty’s desk sometime this week. The Senate needs to take one more vote to line up two slightly different versions.

The bill would allow donors to deduct charitable contributions from their 2009 state income taxes. It would apply to donations made specifically for Haiti relief efforts.

Corporations could also deduct Haiti donations from corporate franchise taxes.

The legislation would match up state and federal tax law.

Source