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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
 
Public-accountant-in-Purple-Suit---Public-acc
 

Resources


 

Archived Tuesday Tax Tips

 

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)
 

IRS Tax Lien (Part IVb):

Paying your tax debt in full is the best way to get rid of a federal tax lien. The IRS releases your lien within 30 days after you have paid your tax debt. When conditions are in the best interest of both the government and the taxpayer, other options for reducing the impact of a lien exists. Three methods are available. Part II explained the discharge of property method. Part III explained the subordination method. Part IV will explain the withdrawal method.

One method may allow withdrawal of your Notice of Federal Tax Lien after the lien’s release. The general eligibility includes: (1) your tax liability has been satisfied; (2) your lien has been released; (3) you are in compliance for the past three years in filing (individual, business, and information returns); and (4) you are current on your estimated tax payments and federal tax deposits, if applicable.

The other option may allow withdrawal of your Notice of Federal Tax Lien if you have entered in or converted your regular installment agreement to a direct debit installment agreement. General eligibility includes: (1) you are a qualifying taxpayer (individual and certain businesses); (2) you owe $25,000 or less; (3) your direct debit installment agreement must full pay the amount you owe within 60 months or before the Collection Statute expires, whichever is less; (4) Full compliance with other filing and payment requirements; (5) You have made three consecutive direct debit payments; and (6) you have not defaulted on your current or any previous direct debit installment agreements. . (IRS Web Site) (TTT 10/31/17 & 11/7/17)

 

IRS Tax Lien (Part IVa):

Paying your tax debt in full is the best way to get rid of a federal tax lien. The IRS releases your lien within 30 days after you have paid your tax debt. When conditions are in the best interest of both the government and the taxpayer, other options for reducing the impact of a lien exists. Three methods are available. Part II explained the discharge of property method. Part III will explain the subordination method. Part IV will explain the withdrawal method.

Withdrawal: A “withdrawal” removes the public Notice of Federal Tax Lien and assures that the IRS is not competing with other creditors for your property; however, you are still liable for the amount due. For Eligibility, refer to Form 12277, Application for the Withdrawal of Filed Form 668(Y), Notice of federal Tax Lien (Internal Revenue Code Section 6323(j).
The IRS Commissioner’s 2011 Fresh Start initiative created two additional withdrawal options. The two methods will be explained in Part IVb and IVc. (IRS Web Site) (TTT 10/24/17)
 
 
Public Account Standing in Door way - Public Accountant in Oakdale, MN
 

IRS Tax Lien (Part III):

Paying your tax debt in full is the best way to get rid of a federal tax lien. The IRS releases your lien within 30 days after you have paid your tax debt. When conditions are in the best interest of both the government and the taxpayer, other options for reducing the impact of a lien exists. Three methods are available. Part II explained the discharge of property method. Part III will explain the subordination method. Part IV will explain the withdrawal method.

Subordination: “Subordination” does not remove the lien, but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage. The taxpayer will have to complete Form 14134, Application for Certificate of Subordination of Federal Tax Lien, at least 45 days before the transaction date that the certificate of subordination is needed. Doing so will allow sufficient time for review, determination, notification, and the furnishing of any applicable documents by the transaction date. See Publication 784, Instructions on How to Apply for a Certificate of Subordination of Federal Tax Lien. (IRS Web Site) (TTT 10/17/17)

 

IRS Tax Lien (Part II):

Paying your tax debt in full is the best way to get rid of a federal tax lien. The IRS releases your lien within 30 days after you have paid your tax debt. When conditions are in the best interest of both the government and the taxpayer, other options for reducing the impact of a lien exists. Three methods are available: discharge of property, subordination, or withdrawal. Part II will explain discharge of property. Parts III and IV will explain the other methods.

Discharge of property: A ‘discharge’ removes the lien from specific property. There are several Internal Revenue Code provisions that determine eligibility. Publication 783, Instructions on How to Apply for Certificate of Discharge from Federal Tax Lien, explains the process. The seven-page publication explains the From 14135, Application for Certificate of Discharge of Federal Tax Lien, basis for the discharge, and frequently asked questions with answers. (IRS Web Site) (TTT 09/26/17 thru 10/10/17)

IRS Tax Lien (Part I):

A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property, and financial assets.

A federal tax lien exists after the IRS puts your balance due on the books (assesses your liability); sends you a bill that explains how much you owe (Notice and Demand for Payment); and, you neglect or refuse to fully pay the debt in time.

The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property. For more information, see Publication 594, The IRS Collection Process. (IRS Web Site) (TTT 09/19/17)

IRS Online Payment Plan/Installment Agreement:

If you are financially unable to pay your tax debt immediately, the IRS will set up a monthly payment program through an installment agreement. As long as you pay your tax debt in full, you can reduce or eliminate your payment of penalties or interest, and avoid the fee associated with setting up the agreement.

All required tax returns must be filed before applying for any payment agreement.

To be eligible to apply of an online payment agreement: the individual must owe $50,000 or less in combined individual income tax, penalties and interest and have filed all required returns; and, the businesses must owe $25,000 or less in payroll taxes and have filed all required returns. An online payment agreement (regular installment agreement) fee is $149. An online payment agreement that includes direct debit installment agreement (DDIA) fee is $31. FYI: A regular installment agreement fee is $225 and the regular installment agreement with direct debit is $107. (IRS Payment Plans) (TTT 09/12/17)

How Does the IRS Contact Taxpayers? (Part IIIb)

When the IRS needs to contact a taxpayer, the first contact is normally by letter delivered by the U.S. Postal Service. The IRS does not normally initiate contact with taxpayers by emails, nor does it send text messages or contact through social media channels.
IRS Visits (cont.): When an IRS knocks on your door, ask for credentials. IRS representatives can always provide two forms of official credentials: a pocket commission and a Personal Identity Verification Credentials (PIV). Pocket commissions describe the specific authority and responsibilities of the authorized holder. The PIV is a government-wide standard for secure and reliable forms of identification for federal employees and contractors. Criminal investigators also have a badge and law enforcement credentials.

The IRS never initiates contact using social media or text messages. First contact generally comes in the mail but not always. A special page on IRS.gov, “How to know it’s really the IRS calling or knocking on your door,” helps taxpayers determine if a person claiming to be from the IRS is legitimate or an impostor. (IRS 2017ARD 150-3) (TTT 09/05/17)

How Does the IRS Contact Taxpayers? (Part IIIa)

When the IRS needs to contact a taxpayer, the first contact is normally by letter delivered by the U.S. Postal Service. The IRS doesn’t normally initiate contact with taxpayers by emails, nor does it send text messages or contact through social media channels.
IRS Visits: (1) IRS revenue officers routinely make unannounced visits to a taxpayer’s home or place of business to discuss taxes owned, delinquent tax returns, or a business falling behind on payroll tax deposits. IRS revenue officers will request payment of taxes owed by the taxpayer; however, payment will never be requested to a source other than the US Treasury; (2) IRS revenue agents usually visit taxpayers or tax professionals to conduct the audit after either mailing a notice and/or agreeing on the day and time. IRS revenue agents will sometimes make unannounced visits to a taxpayer’s home or place of business to discuss a tax matter; and, (3) IRS criminal investigators are federal law enforcement agents who may visit a taxpayer’s home or place of business unannounced while conducting an investigation. They will not demand any sort of payment.
Next week, Part IIIb, Forms of official credentials. (IRS 2017ARD 150-3) (TTT 08/29/17)