taxpayers

IRS Announces 2017 Filing Season Date

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

2016 Year-End Tax Planning

 

Download our 2016 year-end tax planning guide for free! 

By Tax News

The Internal Revenue Service (IRS) has announced that the next US tax season will begin on January 23, 2017, and reminded individual taxpayers claiming certain tax credits to expect a longer wait for their refunds.

More than 153m individual tax returns are expected to be filed in 2017, and the agency expects more than four out of five will be prepared electronically using tax return preparation software.

Many software companies and tax professionals will be accepting tax returns before January 23 and then will submit the returns when IRS systems open. While the IRS will begin processing paper tax returns at the same time, it was stressed that there is no advantage to filing tax returns on paper in early January instead of waiting for the IRS to begin accepting e-filed returns.

The IRS said it anticipates issuing more than nine out of ten refunds in fewer than 21 days, but reminded taxpayers that it is now required to hold refunds claiming the earned income tax credit and the additional child tax credit until February 15.

In addition, the IRS said it will take several days for these refunds to be released and processed through financial institutions. Factoring in weekends and the President’s Day holiday, the agency cautioned that many affected taxpayers may not have actual access to their refunds until the week of February 27.

“For this tax season, it’s more important than ever for taxpayers to plan ahead,” IRS Commissioner John Koskinen said. “People should make sure they have their year-end tax statements in hand, and we encourage people to file as they normally would, including those claiming the credits affected by the refund delay.”

The filing deadline to submit 2016 tax returns will be April 18, 2017, rather than the traditional April 15 date due to a weekend and a holiday.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Tax compliance costs $409 billion a year

By Bankrate

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

taxes-blog-Tax-compliance-costs-409-billion-a-year

The Internal Revenue Service is up front about the hassles of filing your annual tax return. In the instructions for Form 1040, the tax agency breaks out its estimates of taxpayer filing burden.

According to the IRS, it takes the average taxpayer 13 hours to fulfill his or her annual filing responsibility. That covers filling out the forms, records keeping, tax planning and other miscellaneous tax tasks.

Now the Tax Foundation has taken a macro look at the compliance costs of IRS regulations.

Billions of hours and dollars

The Washington, D.C.-based tax policy think tank says Americans will spend more than 8.9 billion hours complying with IRS tax filing requirements in 2016. And those hours will cost the U.S. economy $409 billion this year, says the Tax Foundation.

While the ever-growing tax code is a major factor, an equally annoying problem is the amount of regulations the IRS issues in connection with those tax laws.

“The tax statutes passed by Congress are only the tip of the iceberg when it comes to tax complexity,” says Tax Foundation President Scott Hodge in the report. “There are roughly 7.7 million words of tax regulations, promulgated by the IRS over the last century, which clarify how the U.S. tax statutes work in practice. On top of that, there are almost 60,000 pages of tax-related case law, which are indispensable for accountants and tax lawyers trying to figure out how much their clients actually owe.”

Or, as the old Capitol Hill saying goes, the tax code is the ultimate “keep tax professionals employed” law.

A big business burden

The Tax Foundation study, using data from the Office of Information and Regulatory Affairs and the Bureau of Labor Statistics, calculated the productivity costs of IRS paperwork.

Topping the list of 50 forms is the business income tax return.

Companies spend 2.8 billion hours completing their tax forms at a total annual cost of more than $147 billion.

Individual taxpayers burdened, too

We individual taxpayers are close behind. Filing of individual tax returns takes more than 2.6 billion hours, coming to a dollar cost of $98.7 billion.

Rounding out the top 5 most costly tax filings are tax returns for an S corporation, Form 4562 to claim depreciation and amortization (personal aside: the first time I filed this form in pre-software days, I got so frustrated I cried) and employers’ quarterly federal tax returns.

Also in the top 10 are filings for estates and trusts and Schedule C, which is filed by entrepreneurs operating their own businesses.

Time is tax money

“Time is the most valuable thing we have, and we should not be forced to waste it complying with IRS forms,” says Hodge, who encourages Congress to keep the Tax Foundation findings in mind when considering tax reform.

Do you feel overwhelmed when you do your taxes? How long does the process take? Or do you hand your tax duties over to a professional?

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

IRS does sometimes call taxpayers

By Bankrate

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

taxes-blog-irs-does-sometimes-call-taxpayers

The Internal Revenue Service has learned a hard lesson about never saying never.

After years of assuring us that IRS employees never initiate calls to taxpayers, a tax preparer told the National Taxpayer Advocate that one of his clients had indeed received a call from the IRS — the real, live, legitimate IRS — without any prior notice.

That “no call without a letter first” procedure is regularly cited by the IRS, including by Commissioner John Koskinen himself, when alerts are issued in connection with the persistent IRS impersonation telephone tax scam.

As the scam, which the IRS and the Treasury Inspector General for Tax Administration say is the largest ever, expanded, taxpayers were advised to ignore purported phone calls from the IRS in order to protect themselves against tax identity theft and refund fraud.

Now, that warning has been turned upside down — at least a bit.

IRS contact confusion

That actual IRS agents do sometimes call taxpayers unannounced has the tax world buzzing. It also has taxpayers worried about how they now can differentiate between real IRS callers and criminal con artists.

The revelation came at a May 5 public forum in Iowa, one of several that National Taxpayer Advocate Nina Olson is holding across the country.

According to the tax publication Tax Analysts, which first reported the real IRS auditor calls, an Iowa enrolled agent said an IRS employee in the state called one of his clients, an elderly man, without first sending the taxpayer a contact letter.

While Olson expressed surprise at the unannounced IRS phone call, others at the forum said the practice was common, at least in the Hawkeye State.

After the Iowa event, Olson told Tax Analysts that an Omaha, Nebraska-based Taxpayer Advocate Service staffer told her that as far back as a year ago, the Internal Revenue Manual advised revenue agents that the preferred method for initiating taxpayer contact was by phone.

Olson gave the IRS’ occasional first-contact calls the benefit of the doubt, speculating that the IRS manual’s call instruction may be old and not revised to account for the current rash of telephone tax scams.

IRS revises phone call procedure

The IRS itself, however, has had second thoughts about its call-first audit outreach.

In statement issued after the Iowa forum, the IRS detailed the differences between a real auditor’s call and one from tax ID thieves. “Generally, phone scam callers are focused on masquerading as an IRS collection operation and demanding immediate payment of money,” said the IRS statement. “These callers typically are not saying they are contacting taxpayers for an audit.”

The IRS also noted that when a legitimate tax agent conducts an audit, an appointment generally must be scheduled to discuss the case. IRS revenue agents do, in some limited in-person field audits, call first to schedule the initial audit meeting. But during those scheduling calls, a real IRS agent will not ask for payment or personal financial information.

Those call-first instances, however, are over.

“In an abundance of caution and in light of pervasive phone scams seeking to extort money from taxpayers, the IRS has decided to adjust this policy for in-person field exams,” said the IRS in its statement. It now will notify taxpayers in this smaller exam category first by mail that their return has been selected for audit and then contact them to schedule audit appointments.

You, too, can help by remaining skeptical of all purported tax calls. If you are concerned about a call ostensibly from the IRS, hang up and contact the agency directly yourself or have your tax preparer do so.

Don’t worry. The IRS won’t be mad that you broke off the call. In fact, the agency suggests the very same thing.

You also should keep an eye on your personal data and credit reports if you have or suspect you’ve fallen prey to tax identity thieves.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.