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Tax Tips and Resources in Twin Cities, MN


 
 

Resources

 
Internal Revenue Service www.irs.gov

MN Department of Revenue http://taxes.state.mn.us

Social Security Administration www.socialsecurity.gov

MN Dept of Employment and Economic Development www.uimn.org

MN Secretary of State www.sos.state.mn.us

MN Attorney General www.ag.state.mn.us

MN New Hire www.mn-newhire.com
 
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Resources


 

Archived Tuesday Tax Tips

 

Taxpayer Bill of Rights (Part IV):

The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Rights #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.

What This Means for You
The Commissioner must ensure an independent IRS Office of Appeals that is separate from the IRS Office that initially reviewed your case. Generally, Appeals cannot discuss a case with the IRS unless you or your representative is given the opportunity to be present. RRA 98 § 1001(a)(4), Rev. Proc. 2012-18
See IRS Publication 4227, Overview of the Appeals Process.
The IRS must ensure that an appeals officer is regularly available within each State.
If you do not agree with the proposed adjustment as a result of an examination (audit), you have the right to an administrative appeal. Statement of Procedural Rules, 26 C.F.R. § 601.103(b)
More information next week on Right #5 (IRS NTA web site) (TTT 2/13/18)

 

Taxpayer Bill of Rights (Part II):

The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson.

Bill of Rights #4: The Right to Challenge the IRS’s Position and Be Heard (cont.)

If you are notified by the IRS that it has adjusted your return because of a mathematical or clerical error, you have 60 days to tell the IRS that you disagree. If the IRS is not persuaded, it will issue you a Statutory Notice of Deficiency proposing a tax adjustment. This notice provides you with a right to challenge the proposed adjustment in Tax Court by filing a petition within 90 days of the date of the notice (150 days if the notice is addressed to a person outside the United States), without first paying the proposed adjustment. IRC § 6213(b)
For more information about the United States Tax Court, see the Court’s taxpayer information page.
More information next week. (IRS NTA web site) (TTT 1/30/18)

 

Taxpayer Bill of Rights (Part II):

The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson.

Bill of Rights #4: The Right to Challenge the IRS’s Position and Be Heard (cont.)

If you are notified by the IRS that it has adjusted your return because of a mathematical or clerical error, you have 60 days to tell the IRS that you disagree. If the IRS is not persuaded, it will issue you a Statutory Notice of Deficiency proposing a tax adjustment. This notice provides you with a right to challenge the proposed adjustment in Tax Court by filing a petition within 90 days of the date of the notice (150 days if the notice is addressed to a person outside the United States), without first paying the proposed adjustment. IRC § 6213(b)
For more information about the United States Tax Court, see the Court’s taxpayer information page.
More information next week. (IRS NTA web site) (TTT 1/30/18)

 

Taxpayer Bill of Rights (Part I):

The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson. It applies to all taxpayers in their dealings with the IRS. The Taxpayer Bill of Rights groups the existing rights in the tax code into ten fundamental rights, and makes them clear, understandable, and accessible. The Tuesday Tax Tip will discuss a few of them during the next few weeks.

Bill of Rights #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.

What This Means for You
If you submit documentation or raise objections during an examination, and the IRS does not agree with your position, it will issue a statutory notice of deficiency explaining why it is increasing your tax, which gives you the right to petition the U.S. Tax Court prior to paying the tax. IRC § 6212
More information next week. (IRS NTA web site) (TTT 1/23/18)

 

Freedom of Information Act (FOIA):

The Freedom of Information Act (or FOIA) was enacted in 1966. It gives any person the right to access federal agency records or information. The act is based on the presumption that the government and its information belong to the people. The FOIA law was amended in 1996 requiring federal agencies to make many types of record available online. Visit the IRS eReading Room to learn more.

The IRS offers routine access to other records through procedures designed to make access quick and easy. For more information, use the IRS web site, Freedom of Information page “Routine Access.”

If you plan to make a FOIA request to obtain the records you seek, you may refer to the IRS FOIA Guide. IRS may withhold records protected from disclosure by one of the law’s nine exemptions and it must withhold when law prohibits disclosure of the records. (IRS Web Site – Freedom of Information) (TTT 1/16/18)
 

Injured Spouse:

You may be an injured spouse if you file a joint tax return and all or part of your portion of the overpayment was, or is expected to be, applied (offset) to your spouse's legally enforceable past-due federal tax, state income tax, state unemployment compensation debts, child or spousal support, or a federal nontax debt, such as a student loan.

Form 8379, Injured Spouse Allocation, is filed by one spouse (the injured spouse) on a jointly filed tax return when the joint overpayment was (or is expected to be) applied (offset) to a past-due obligation of the other spouse. By filing Form 8379, the injured spouse may be able to get back his or her share of the joint refund.

The form should be filed when you become aware that all or part of your share of an overpayment was, or is expected to be, applied (offset) against your spouse's legally enforceable past-due obligations. You must file Form 8379 for each year you meet this condition and want your portion of any offset refunded.

You can file Form 8379 with your joint tax return or amended joint tax return (Form 1040X), or you can file it afterwards by itself. You must file Form 8379 within 3 years from the due date of the original return (including extensions) or within 2 years from the date that you paid the tax that was later offset, whichever is later. (IRS Form 8379 instructions) (TTT 01/09/18)

 
 
Public Account Standing in Door way - Public Accountant in Oakdale, MN
 

Innocent Spouse – Types of Relief (Part II):

Three types of innocent spouse relief are available.


Innocent Spouse Relief – By requesting innocent spouse relief, you can be relieved of responsibility for paying tax, interest, and penalties if your spouse did something wrong on your tax return.

Relief by Separation of Liability – Under this type of relief, you allocate (divide) the understatement of tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse).

Equitable Relief – If you do not qualify for innocent spouse relief or separation of liability, you may still be relieved of responsibility for tax, interest, and penalties through equitable relief.

For more information, refer to the Innocent Spouse Questions & Answers on the IRS web site.
Part III will explain how to file for Innocent Spouse Relief.

(IRS.gov – Introduction to Innocent Spouses) (TTT 12/19/17& 12/26/17)

 

Innocent Spouse – Intro (Part I):

When married taxpayers file “married filing jointly” taxpayers are unable to amend to married filing separately. The “married filing jointly” status results in both taxpayers jointly and individually responsible for the tax and any interest or penalty due on the joint return even it they later divorce. This is true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.

The IRS “Innocent Spouse Relief” may relieve a spouse of the tax, interest, and penalties on a joint tax return. There are three types of relief available (defined in the Internal Revenue Code 6015). Part II will discuss the three types of relief.

Married persons who file separate returns in community property states may also qualify for relief.

(IRS.gov – Introduction to Innocent Spouses) (TTT 12/12/17)

When an IRS Letter Arrives:

The IRS mails millions of letters to taxpayers every year for many reasons. Here are a few suggestions on how you can handle a letter or notice from the IRS:


Don’t panic. Simply responding will take care of most IRS letters and notices.
Read the entire letter carefully. Most letters deal with a specific issue and provide specific instructions on what to do.
Compare it with the tax return. If a letter indicates a changed or corrected tax return, taxpayer should review the information and compare it with their original return.
Only reply if necessary. There is usually no need to reply to a letter unless specifically instructed to do so, or to make a payment.
Respond timely. Taxpayers should respond to a letter with which they do not agree. They should mail a letter explaining why they disagree. They should mail their response to the address listed at the bottom of the letter. The taxpayer should include information and documents for the IRS to consider. The taxpayer should allow at least 30 days for a response.

When a specific date is listed in the letter, there are two main reasons taxpayers should respond by that date.


To minimize additional interest and penalty charges.
To preserve appeal rights if the taxpayer doesn’t agree.



Don’t call. From most letters, there is no need to call the IRS or make an appointment at a taxpayer assistance center. If a call seems necessary, the taxpayer can use the phone number in the upper right-hand corner of the letter. They should have a copy of the tax return and letter on hand when calling.
Keep the letter. A taxpayer should keep copies of any IRS letters or notices received with their tax records.

(IRS 2017ARD 225-1) (TTT 11/28/17)

IRS National Tax Security Awareness Week:

During this week, the IRS is focusing on key steps people can follow to protect their tax data:

Keep personal data safe. Be vigilant with personal information. While taxpayers are shopping for gifts, criminals are shopping for sensitive data including credit cards, financial accounts, and Social Security numbers. Taxpayers should use strong, unique passwords for each online account and avoid routinely carrying a Social Security card. Avoid unsecured Wi-Fi in public locations while holiday shopping.
Avoid phishing emails by data thieves. Learn to recognize and avoid phishing emails, threatening phone calls, and texts from thieves. People should never click on links or download attachments from unknown or suspicious email addresses. Remember that the IRS doesn't initiate spontaneous contact with taxpayers by email or phone to request personal or financial information.
Take steps to protect data after a breach. There are specific things that data theft victims can do after a criminal steals their information. This includes using credit monitoring services, putting a freeze on accounts and resetting passwords.
Avoid the W-2 scam. Employers can take steps to protect their employees’ data from the growing W-2 email scam. Employers and payroll offices should educate employees about how to recognize an email from a thief who wants to gain access to sensitive employee data so they do not respond to these scam emails.
Beware of scams against employers. Just like individuals, businesses may have their identities stolen. Small businesses and large businesses alike should protect their employer identification numbers. For 2018, the IRS is also asking that employers provide additional information to help verify the legitimacy of their tax return. Such information includes filing history, payment history and parent company information. In the case of a sole proprietorship, the IRS might ask for a driver’s license number.
(IRS 2017ARD 227-4) (TTT 11/28/17)

Be Alert to Scammers Who Pose as the IRS:

Taxpayers need to be aware of Scammers pretending to be from the IRS. The most common scams are phone calls and fake emails. They use the IRS name, log or a fake website to try and steal money from taxpayers.

The IRS will NOT:

Call to demand immediate payment using specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS first mails a bill to taxpayers who owe taxes. If the IRS assigns a case to a Private Debt collector (PCA), both the IRS and the authorized collection agency send a letter to the taxpayer. Payment is always to the United States Treasury.
Threaten immediately to bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
Demand payment of taxes without giving the taxpayer the opportunity to question or appeal the amount owed.
Ask for credit or debit card numbers over the phone

For taxpayers who get a ‘phishing’ email, the IRS offers this advice

Do not reply to the message.
Do not give out personal or financial information.
Forward the email to phishing@irs.gov Then delete it.
Do not open any attachments or click on any links. They may have malicious code that will infect your computer.

(IRS 2107ARD 158-1) (TTT 11/21/17)

IRS Tax Lien (Part V):

How a Lien Affects You - (1) A lien attaches to all of your assets (such as property, securities, vehicles) and to future assets acquired during the duration of the lien. (2) Once the IRS files a Notice of Federal Tax Lien, it may limit your ability to get credit. (3) The lien attaches to all business property and to all rights to business property, including accounts receivable. (4) If you file for bankruptcy, your tax debt, lien, and Notice of Federal Tax Lien may continue after bankruptcy.

Avoid a Lien – You can avoid a federal tax lien by simply filing and paying all your taxes in full and on time. If you cannot file or pay on time, do not ignore the letters or correspondence you get from the IRS. If you cannot pay the full amount you owe, payment options (/payments) are available to help you settle your tax debt over time.

Lien vs. Levy – A lien is not a levy. A lien secures the government’s interest in your property when you do not pay your tax debt. A levy (businesses/small businesses – self-employed/levy) actually takes the property to pay the tax debt. If you do not pay or make arrangements to settle your tax debt, the IRS can levy, seize and sell any type of real or personal property that you own or have an interest in. (IRS Web Site) (TTT 11/14/17)