Source: IRS Number  IR-2019-141 ( modified by Zaher Fallahi, Esq., CPA)

The IRS has urged taxpayers to resolve their significant tax debts to avoid putting their passports in jeopardy. They should contact the IRS now to avoid delays in their travel plans later. Under the Fixing America’s Surface Transportation (FAST) Act, the IRS notifies the State Department (State) of taxpayers certified as owing a seriously delinquent tax debt (SDTD), currently $52,000 or more. The law then requires State to deny their passport application or renewal. If a taxpayer currently has a valid passport, State may revoke the passport or limit a taxpayer’s ability to travel outside the United States.

When the IRS certifies a taxpayer to State as owing a SDTD, the taxpayer receives a Notice CP508C from the IRS. The notice explains what steps the taxpayer needs to take to resolve the debt. 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 options. Taxpayers should not delay because some resolutions take longer than others.

Don’t Delay!
It’s especially important for taxpayers with imminent travel plans who have had their passport applications denied by State to call the IRS promptly.

For expedited treatment, taxpayers must provide the following documents to the IRS: 

1- Proof of travel. This can be a flight itinerary, hotel reservation, cruise ticket, international car insurance or other document showing location and approximate date of travel or time-sensitive need for a passport.

2- Copy of letter from State denying their passport application or revoking their passport. State has sole authority to issue, limit, deny or revoke a passport.

Before contacting State about revoking a taxpayer’s passport, the IRS will send Letter 6152, Notice of Intent to Request U.S. Department of State Revoke Your Passport, to the taxpayer to let them know what the IRS intends to do and give them another opportunity to resolve their debts . Taxpayers must call the IRS within 30 days from the date of the letter. Generally, the IRS will not recommend revoking a taxpayer’s passport if the taxpayer is making a good-faith attempt to resolve their tax debts.

Ways to Resolve Tax Issues 
There are several ways taxpayers can avoid having the IRS notify State of their seriously delinquent tax debt. They include the following:

1- Paying the tax debt in full,

2- Paying the tax debt timely under an approved installment agreement,

3- Paying the tax debt timely under an accepted offer in compromise,

4- Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,

5- Having a pending collection due process appeal with a levy, or

6-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:

1- 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. Taxpayers who are eligible can use the Online Payment Agreement system to set up a monthly payment agreement. Using the IRS online payments plan system is cheaper and can save time.

2- 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 determine the taxpayer’s ability to pay. Taxpayers can use the Offer-In-Compromise tool to help them determine whether they’re eligible for an offer in compromise. For more on denying, revoking passports because of tax debt visit IRS.gov

Note, Emphasis added by Zaher Fallahi, Esq., CPA

Zaher Fallahi, Tax Defense Attorney, CPA, licensed in California and Washington D. C., Tax Defense Attorney assists taxpayers with delinquent tax debts, foreign gifts, and tax problem resolutions nationwide. Tel.: (310) 719-1040, (714) 546-4272 and (877) 687-7558 toll free nationwide, E-mail   taxattorney@zfcpa.com

Security Summit warns of new IRS impersonation email scam; reminds taxpayers the IRS does not send unsolicited emails

Source: Issue Number:    IR-2019-145, August 22, 2019

WASHINGTON — The IRS and its Security Summit partners today warned taxpayers and tax professionals about a new IRS impersonation scam campaign spreading nationally on email. Remember: the IRS does not send unsolicited emails and never emails taxpayers about the status of refunds.

The IRS this week detected this new scam as taxpayers began notifying phishing@irs.gov about unsolicited emails from IRS imposters. The email subject line may vary, but recent examples use the phrase “Automatic Income Tax Reminder” or “Electronic Tax Return Reminder.”

The emails have links that show an IRS.gov-like website with details pretending to be about the taxpayer’s refund, electronic return or tax account. The emails contain a "temporary password" or "one-time password" to "access" the files to submit the refund. But when taxpayers try to access these, it turns out to be a malicious file.

“The IRS does not send emails about your tax refund or sensitive financial information,” said IRS Commissioner Chuck Rettig. “This latest scheme is yet another reminder that tax scams are a year-round business for thieves. We urge you to be on-guard at all times.” (Emphasis added by Zaher Fallahi, CPA, Esq.)

This new scam uses dozens of compromised websites and web addresses that pose as IRS.gov, making it a challenge to shut down. By infecting computers with malware, these imposters may gain control of the taxpayer’s computer or secretly download software that tracks every keystroke, eventually giving them passwords to sensitive accounts, such as financial accounts.

The IRS, state tax agencies and the tax industry, which work together in the Security Summit effort, have made progress in their efforts to fight stolen identity refund fraud. But people remain vulnerable to scams by IRS imposters sending fake emails or harassing phone calls.

The IRS doesn't initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts. (Emphasis added by Zaher Fallahi, CPA, Esq.)

The IRS also doesn’t call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. See Report Phishing and Online Scams for more details. (Emphasis added by Zaher Fallahi, CPA, Esq.)

Zaher Fallahi, CPA, Tax Defense Attorney, licensed in California and Washington D. C., Tax Defense Attorney assists taxpayers with tax problems and foreign gifts issues nationwide. Tel.: (310) 719-1040, (714) 546-4272 and (877) 687-7558 toll free nationwide, E-mail   taxattorney@zfcpa.com

IR-2019-144, August 14, 2019

WASHINGTON — The Internal Revenue Service (“IRS”) is automatically waiving the 2018 estimated tax penalty for the more than 400,000 eligible taxpayers who already filed their federal income tax returns but did not claim the waiver.

The IRS will apply this waiver to tax accounts of all eligible taxpayers, so there is no need to contact the IRS to apply for or request the waiver.

Earlier this year, the IRS lowered the usual 90% penalty threshold to 80% to help taxpayers whose withholding and estimated tax payments fell short of their total 2018 tax liability. The agency also removed the requirement that estimated tax payments be made in four equal installments, as long as they were all made by January 15, 2019. The 90% threshold was initially lowered to 85% on January 16 and further lowered to 80% on March 22.

The automatic waiver applies to any individual taxpayer who paid at least 80% of their total tax liability through federal income tax withholding or quarterly estimated tax payments but did not claim the special waiver available to them when they filed their 2018 return earlier this year.

"The IRS is taking this step to help affected taxpayers," said IRS Commissioner Chuck Rettig. "This waiver is designed to provide relief to any person who filed too early to take advantage of the waiver or was unaware of it when they filed."

Refunds planned for eligible taxpayers who paid penalty

Over the next few months, the IRS will mail copies of notices CP 21 granting this relief to affected taxpayers. Any eligible taxpayer who already paid the penalty will also receive a refund check about three weeks after their CP21 notice regardless if they requested Penalty relief. The agency emphasized that eligible taxpayers who have already filed a 2018 return do not need to request penalty relief, contact the IRS or take any other action to receive this relief.

For those yet to file, the IRS urges every eligible taxpayer to claim the waiver on their return. This includes those with tax-filing extensions due to run out on Oct. 15, 2019. The quickest and easiest way is to file electronically and take advantage of the waiver computation built into their tax software package. Those who choose to file on paper can fill out Form 2210 and attach it to their 2018 return. See the instructions to Form 2210 for details.

Because the U.S. tax system is pay-as-you-go, taxpayers are required by law to pay most of their tax obligation during the year, rather than at the end of the year. This can be done by having tax withheld from paychecks, pension payments or Social Security benefits, making estimated tax payments or a combination of these methods.

Like last year, the IRS urges everyone to do a "Paycheck Checkup" and review their withholding for 2019. This is especially important for anyone who faced an unexpected tax bill or a penalty when they filed this year. It's also an important step for those who made withholding adjustments in 2018 or had a major life change. Those most at risk of having too little tax withheld include those who itemized in the past but now take the increased standard deduction, as well as two wage earner households, employees with nonwage sources of income and those with complex tax situations.

Zaher Fallahi, Tax Defense Attorney, CPA, licensed in California and Washington D. C., Tax Defense Attorney assists taxpayers with foreign gifts and tax problems nationwide. Tel.: (310) 719-1040, (714) 546-4272 and (877) 687-7558 toll free nationwide, E-mail   taxattorney@zfcpa.com

Source: IRS:    Tax Reform Tax Tip 2019-102

The IRS encourages everyone to use the Tax Withholding Estimator to perform a quick “paycheck checkup.”  This is even more important following the recent changes to the tax law for 2018 and beyond.

The Estimator helps you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck at work. There are several reasons to check your withholding:

1- Checking your withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year. 

2- At the same time, with the average refund topping $2,800, you may prefer to have less tax withheld up front and receive more in your paychecks. 

If you are an employee, the Tax Withholding Estimator helps you determine whether you need to give your employer a new Form W-4, Employee's Withholding Allowance Certificate (PDF). You can use your results from the Estimator to help fill out the form and adjust your income tax withholding.  If you receive pension income, you can use the results from the estimator to complete a Form W-4P (PDF) and give it to your payer.

Zaher Fallahi, CPA, Tax Attorney, advises taxpayers in resolving their tax problems, Offshore Accounts, FBAR, FATCA, OVDP, Streamlined Procedures and Foreign Gifts.  Tel: (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), Toll Free Nationwide 877-687-7558  e-mail taxattorney@zfcpa.com

Source, IRS:    Tax Reform Tax Tip 2019-102

Summer is a season when people have fun, yet get things done. From buying a new house to cleaning their old one, taxpayers who itemize their deductions may be doing things this summer that will affect the tax returns they file 2019 taxes.

The higher standard deduction under the new tax law means fewer taxpayers are itemizing their deductions. However, taxpayers who still plan to itemize next year should keep the following tips in mind:

1. Deducting state and local income, sales and property taxes

The deduction that taxpayers can claim for state and local income, sales and property taxes is limited. These deductions are limited to a combined, total deduction of $10,000 and it is $5,000 if married filing separately. Any state and local taxes paid above this amount can’t be deducted.

2. Refinancing a home. The deduction for mortgage interest is also limited

 It is limited to interest paid on a loan secured by the taxpayer’s primary residence or second home. For homeowners who choose to refinance, they must use the loan to buy, build, or substantially improve their main home or second home, and the mortgage interest they may deduct is subject to the limits described in item 3 below; “buying a home.”

3. Buying a home. 

Taxpayers who buy a new home this year can only deduct mortgage interest they pay on a total of $750,000 in qualifying debt for a first and second home. It is $375,000 if married filing separately. For existing mortgages, if the loan originated on or before December 15, 2017, taxpayers continue to deduct interest on a total of $1 million in qualifying debt secured by first and second homes.

4. Donating items and deducting money. 

Many taxpayers do a good summer clean-out in summer. They often find unused items in good condition they can donate to a qualified charitable organization. These donations may qualify for a tax deduction. Taxpayers must itemize deductions to deduct and must have proof of all donations. Taxpayers can use the Interactive Tax Assistant to help determine whether they can deduct their charitable donation.

5. Deducting mileage for charity

Driving a personal car while donating services on a trip sponsored by a charity could qualify for a tax break. Itemizers can deduct 14 cents per mile for charitable mileage driven in 2019.

6. Reporting gambling winnings and claiming gambling losses

Taxpayers who itemize can deduct gambling losses up to the amount of gambling winnings. They can use the Interactive Tax Assistant to find out more about reporting gambling winnings and  losses next year.

Zaher Fallahi, CPA, Tax Attorney, advises taxpayers including Americans Living Abroad, in resolving their tax problems and undisclosed foreign bank accounts; FBAR, FATCA and Offshore Voluntary Disclosure Program (OVDP).  Telephones: (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), Toll Free Nationwide 877-687-7558  e-mail taxattorney@zfcpa.com

Source: IRS Issue Number:    IR-2019-44

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. Explore your rights and our obligations to protect them.

1-The Right to Be Informed

Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.

2-The Right to Quality Service

Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service.

3-The Right to Pay No More than the Correct Amount of Tax

Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.

4-The Right to Challenge the IRS’s Position and Be Heard

Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.

5-The Right to Appeal an IRS Decision in an Independent Forum

Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.

6-The Right to Finality

Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS has finished an audit.

7-The Right to Privacy

Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

8-The Right to Confidentiality

Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

9-The Right to Retain Representation

Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation.

10-The Right to a Fair and Just Tax System

Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely.

Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

Zaher Fallahi Certified Public Accountant (CPA), Esq., is licensed in California and Washington D. C., and assists taxpayers with their Tax Audit Representation and Tax Return Preparation nationwide. For an Attorney-Client Privileged consultation please call: 

(310) 719-1040 (Los Angeles)

(714) 546-4272 (Orange County) 

(877) 687-7558

Costa Mesa small CPA firm needs a part-time bookkeeper. CPA firm experience and working knowledge of QuickBooks is a must. Resume and compensation history and requirement to    zfallahi@zfcpa.com

IRS: Failure to report offshore funds remains a crime; IRS includes topic on its 2019 ‘Dirty Dozen’ scams list

WASHINGTON — Hiding money or assets in unreported offshore accounts remains on the Internal Revenue Service’s “Dirty Dozen” list of tax scams for 2019, the agency said today.

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, including offshore schemes. Many of these peak during filing season as people prepare their tax returns or seek help with their taxes.

Taxpayers should remain wary of offshore avoidance schemes. Following the IRS intensifying efforts on offshore issues in recent years, many taxpayers have already voluntarily disclosed their participation in these schemes. The IRS conducted thousands of offshore-related civil audits that resulted in the payment of tens of millions of dollars in unpaid taxes. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitution.

“Offshore evasion remains a primary focal point of overall IRS enforcement efforts,” said IRS Commissioner Chuck Rettig. “Our Criminal Investigation and civil enforcement teams work closely with the Justice Department in the international arena to ensure our nation’s tax laws are followed. Taxpayers considering hiding funds or assets offshore should think twice; the civil penalties and criminal sanctions can be severe.”

Illegal scams like these can lead to significant penalties as well as interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

Hiding income offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by attempting to hide income in offshore banks, brokerage accounts or nominee entities. They then access the funds using debit cards, credit cards or wire transfers. Others have used foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as bankers and others suspected of helping clients hide their assets overseas.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant fines, as well as the possibility of criminal prosecution.

The IRS reminds taxpayers who have failed to properly report their offshore investments or pay tax on these investments’ income, to come forward.  Since the circumstances of taxpayers vary widely, the IRS offers several options for addressing the noncompliance.

Third-party reporting

Under the Foreign Account Tax Compliance Act (FATCA) and the network of intergovernmental agreements between the U.S. and partner jurisdictions, automatic third-party account reporting continues. The IRS receives more information regarding potential non-compliance by U.S. persons because of the Department of Justice’s Swiss Bank Program. This information makes it less likely that offshore financial accounts will go unnoticed by the IRS.

Penalties for failure to properly report offshore transactions can be severe. A summary of these penalties as well as a comparison of what must be reported on Form 8938, Statement of Specified Foreign Financial Assets, and the Report of Foreign Bank and Financial Accounts (FBAR) can be found on IRS.gov.

Zaher Fallahi, CPA, Tax Attorney, nationwide representation with Offshore Accounts (OVDP), Streamlined Procedures, Foerign Bank Account Report (FBAR), Foreign Account Tax Compliance Act (FATCA), Taxation of Americans Living Abroad and Foreign Gifts. For an Attorney-Client Privileged Consultation, Call:

 (877) 687-7558 Nationwide Toll Free

(310) 719-1040 (Los Angeles)

(714) 546-4272 (Orange County)

E-mail taxattorney@zfcpa.com

Source: IRS Issue Number:    IR-2019-44

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. Explore your rights and our obligations to protect them.

1-The Right to Be Informed

Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.

2-The Right to Quality Service

Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service.

3-The Right to Pay No More than the Correct Amount of Tax

Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.

4-The Right to Challenge the IRS’s Position and Be Heard

Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.

5-The Right to Appeal an IRS Decision in an Independent Forum

Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.

6-The Right to Finality

Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS has finished an audit.

7-The Right to Privacy

Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

8-The Right to Confidentiality

Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

9-The Right to Retain Representation

Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation.

10-The Right to a Fair and Just Tax System

Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

Zaher Fallahi Certified Public Accountant (CPA), Esq., is licensed in California and Washington D. C., and assists taxpayers with their Tax Audit Representation and Tax Return Preparation nationwide. For an Attorney-Client Privileged consultation please call: 

(310) 719-1040 (Los Angeles)

(714) 546-4272 (Orange County) 

(877) 687-7558

E-mail taxattorney@zfcpa.com