Accounting and Tax Associates Net, Inc.

07/09/2022

Companies who promise to eliminate tax debt sometimes leave taxpayers high and dry

As the old saying goes: When something sounds too good to be true, it probably is. Taxpayers with outstanding tax bills might be tempted by businesses who advertise and offer to help them reduce their tax debt. These businesses, often called Offer in Compromise mills, make huge claims about reducing unpaid taxes for pennies on the dollar. Unfortunately, these companies sometimes don’t deliver and charge large fees.

An Offer in Compromise with the IRS can help some taxpayers who can’t pay their tax bill.

An Offer in Compromise is an agreement between a taxpayer and the IRS that settles a tax debt for less than the full amount owed. The offer program gives eligible taxpayers a path toward paying off their debt when they otherwise couldn’t or would face financial hardship.

The OIC mills that are dishonest take advantage of taxpayers’ lack of knowledge to make a quick buck.

These OIC mills urge people to hire their company to file an OIC application, even though the taxpayer won't qualify. They often charge big fees to prepare applications that they know the IRS will deny. This unfair practice wastes taxpayers’ time and money.

Taxpayers who do qualify for an OIC can get the same deal working directly with the IRS, without the extra fees.

The OIC mills that are dishonest are a problem all year long, but they step up their advertising after the filing season ends, when taxpayers are trying to resolve their tax issues.

Here’s what taxpayers considering an OIC should know:

Individual taxpayers can use the IRS's Offer in Compromise Pre-Qualifier tool to see if they're eligible.

When a taxpayer is ready to apply, they can watch an OIC video playlist that will lead them through the steps and forms to calculate an appropriate offer based on their assets, income, expenses and future earning potential.

Taxpayers must make an offer based on their true ability to pay.

Applying does not guarantee that the IRS will accept the taxpayer’s offer.

02/13/2022

IRS NOTICE 2-11-2022
1. IRS continues work to help taxpayers, suspends mailing of additional letters
The IRS announced the suspension of more than a dozen additional letters, including balance due notices and unfiled tax return notices. The IRS entered this filing season with several million original and amended returns filed by individuals and businesses that have not been processed due to challenges of the historic pandemic and is taking this step to help avoid confusion for taxpayers and tax professionals. These automatic notices have been temporarily stopped until the backlog is worked through.
2. Tax Time Guide: American Rescue Plan changes can boost refunds for many families
The IRS urges Americans to file a 2021 federal income tax return so they can take advantage of key tax benefits included in the American Rescue Plan and other recent legislation. The IRS series Tax Time Guide provides resources and information to help taxpayers during the filing season.

01/06/2022

How to avoid buying fake COVID tests online
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January 4, 2022
by Colleen Tressler
Division of Consumer and Business Education, FTC
The news is filled with images of long lines at in-person COVID testing sites and reports of limited supplies of at-home test kits. It’s not a surprise that, according to the U.S. Food and Drug Administration, fake and unauthorized at-home testing kits are popping up online as opportunistic scammers take advantage of the spike in demand.

Using these fake products isn’t just a waste of money, it increases your risk of unknowingly spreading COVID-19 or not getting the appropriate treatment. So, if you’re shopping online for COVID test kits and related items:

Make sure the test you’re buying is authorized by the FDA. Check the FDA’s lists of antigen diagnostic tests and molecular diagnostic tests before you buy to find the tests authorized for home use. (EUA is “emergency use authorization.”)
Check out a seller before you buy, especially if you’re buying from a site you don’t know. Search online for the website, company, or seller’s name plus words like “scam,” “complaint,” or “review.”
Compare online reviews from a wide variety of websites. You can get a good idea about a company, product, or service from reading user reviews on various retail or shopping comparison sites. Think about the source of the review. Ask yourself: Where is this review coming from? Is it from an expert organization or individual customers?
Pay by credit card. If you’re charged for an order you never got, or for a product that's not as advertised, contact your credit card company and dispute the charge.
Suspect a scam seller or bogus test? We want to hear about it at ReportFraud.ftc.gov.

Learn more about COVID-related frauds at ftc.gov/coronavirus/scams.

The official website of the Federal Trade Commission, protecting America’s consumers for over 100 years.

12/27/2021

Watch for advance Child Tax Credit letter
To help taxpayers reconcile and receive all of the Child Tax Credits to which they are entitled, the IRS will send Letter 6419, 2021 advance CTC, starting late December 2021 and continuing into January. The letter will include the total amount of advance Child Tax Credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments. People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records.

Families who received advance payments will need to file a 2021 tax return and compare the advance Child Tax Credit payments they received in 2021 with the amount of the Child Tax Credit they can properly claim on their 2021 tax return.

The letter contains important information that can make preparing their tax returns easier. People who received the advance CTC payments can also check the amount of their payments by using the CTC Update Portal available on IRS.gov.

Eligible families who did not receive any advance Child Tax Credit payments can claim the full amount of the Child Tax Credit on their 2021 federal tax return, filed in 2022. This includes families who don't normally need to file a tax return.

Economic Impact Payment letter can help with the Recovery Rebate Credit
The IRS will begin issuing Letter 6475, Your Third Economic Impact Payment, to EIP recipients in late January. This letter will help Economic Impact Payment recipients determine if they are entitled to and should claim the Recovery Rebate Credit on their tax year 2021 tax returns that they file in 2022.

Letter 6475 only applies to the third round of Economic Impact Payments that was issued starting in March 2021 and continued through December 2021. The third round of Economic Impact Payments, including the "plus-up" payments, were advance payments of the 2021 Recovery Rebate Credit that would be claimed on a 2021 tax return. Plus-up payments were additional payments the IRS sent to people who received a third Economic Impact Payment based on a 2019 tax return or information received from SSA, RRB or VA; or to people who may be eligible for a larger amount based on their 2020 tax return.

Most eligible people already received the payments. However, people who are missing stimulus payments should review the information to determine their eligibility and whether they need to claim a Recovery Rebate Credit for tax year 2020 or 2021.

Like the advance CTC letter, the Economic Impact Payment letters include important information that can help people quickly and accurately file their tax return.

More information about the advance Child Tax Credit, Economic Impact Payments and other COVID-19-related tax relief may be found at IRS.gov.

09/30/2021

https://www.marca.com/en/lifestyle/us-news/2021/09/29/615415f846163fa5918b458f.html

On the 15th day of each month, families across the United States are supposed to receive advance payments of their 2021 child tax credit money. However, many families are still wai

08/31/2021

WAITING FOR YOUR 2019 OR 2020 TAX REFUND?

Still waiting for your tax refund on your timely filed 2019 or 2020 return? Millions of others are in the same boat, if that makes you feel any better. As of June 25, IRS had a backlog of 16.7 million 2019 and 2020 individual returns that require manual processing by agency employees. Some of these are paper returns.
Others were suspended during electronic processing and need further review.
Unfortunately, there is not much that taxpayers or preparers can do about the delays.
But there are reasons for some hope. IRS expects to complete the processing of 2019 Forms 1040 that were filed on paper sometime this summer. And new returns are now trickling into IRS at a slower rate than during the midst of filing season.
Wonder why it's been so hard to reach a live person at IRS by phone?

One reason is the historic number of callers. During the 2021 filing season, IRS received 85.1 million calls on its toll-free 1040 phone line. Compare this figure with 7.3 million and 12.1 million calls for the 2019 and 2020 filing seasons. So far in 2021, only 3% of callers reached a live customer service representative. According to IRS's National Taxpayer Advocate, the huge increase in calls this year is caused by numerous factors. For example, taxpayers whose refunds on 2019 or 2020 returns were delayed called IRS often and repeatedly. The Service likely also got lots of calls from people who didn't get their expected stimulus checks.
Yours very truly,

THE KIPLINGER EDITORS

07/26/2021

Here’s why taxpayers should have an IRS online account
An IRS online account is an safe an easy way for individual taxpayers to view specific details about their federal tax account. Here are some of the benefits and features of this online system.
Taxpayers can view:
Their payoff amount, which is updated for the current day.
The balance for each tax year for which they owe taxes.
Their payment history.
Key information from the their most current tax return as originally filed.
Payment plan details if they have one.
Digital copies of select IRS notices.
Economic Impact Payments if they received any.
Their address on file.
After viewing their information, a taxpayer can:
Select an electronic payment option.
Set up an online payment agreement.
Go directly to Get Transcript.
New authorization feature
The new the “authorization” option in Online Account allows taxpayers to control who can represent them before the IRS or view their tax records. They can also approve and electronically sign Power of Attorney and Tax Information Authorization requests from their tax professional.
Taxpayer’s balance will update no more than once every 24 hours, usually overnight. Taxpayers should also allow 1 to 3 weeks for payments to show up in the payment history.
To access their information online, taxpayers must register through Secure Access. This is the agency’s two-factor authentication process that protects personal info. Taxpayers can review the Secure Access page process prior to starting registration.
Share this tip on social media -- : Here’s why taxpayers should have an IRS online account.
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Here’s why taxpayers should have an IRS online account | Internal Revenue Service
Tax Tip 2021-107, July 26, 2021

07/16/2021

Illinois Individual Income Tax Filing Season Update - July 15, 2021

Illinois Department of Revenue Issues Automatic Tax Refunds to Thousands of Unemployment Benefit Recipients
Governor Pritzker announced today that the Illinois Department of Revenue (IDOR) has issued automatic refunds to close to 350,000 eligible taxpayers who electronically filed their 2020 Illinois Individual Income Tax Returns prior to a newly enacted federal unemployment tax exemption.

The American Rescue Plan Act (ARPA) of 2021 included a retroactive provision making the first $10,200 per taxpayer (up to $20,400 married, filing jointly) of unemployment benefits nontaxable for returns with a modified Adjusted Gross Income (AGI) of less than $150,000. The provision was enacted after tax filing season opened on February 12, 2021.
"Thanks to the leadership of the Biden-Harris administration, hundreds of thousands of Illinois taxpayers who received unemployment benefits in 2020 are receiving additional money at a time when people need it most," said Governor JB Pritzker. "I'm proud Illinois was one of the few states in the country to automatically adjust these refunds, giving residents faster access to funds as we continue to recover from the economic impact of the COVID-19 pandemic."
Illinois was the second state to recalculate electronically filed 2020 individual income tax returns and notify taxpayers who filed before March 15, 2021, of the systemic adjustment of their AGI.
"By auto adjusting the refunds, we estimate having saved close to $1.5 million given the amount of time and the workforce that would have been required to process the thousands of amended returns," said IDOR Director David Harris. "This does not include the time and cost that taxpayers would have incurred while filing their own amended returns or hiring a professional."
By the end of July, IDOR plans to notify an estimated 3,300 taxpayers who filed paper tax returns prior to the implementation of the federal unemployment exclusion of the need to file amended returns to qualify for any possible refunds.
For taxpayers who filed electronically on or after March 15 and included the unemployment exclusion on their federal and state individual income tax returns, no additional filing changes were required. Taxpayers who filed electronically on or after March 15 but did not include the unemployment exclusion when calculating their AGI were required to file an amended return to adjust their AGI.
________________________________________
Earned Income Credit Update
Illinois tax filers who claim the Illinois Earned Income Credit (EIC) may also be eligible for additional refunds due to the newly enacted federal unemployment compensation tax exemption. IDOR estimates any additional refunds because of an increase to EIC will be issued late in 2021 once federal Earned Income Tax Credit data is provided to the state by the federal Internal Revenue Service.

Additional Resources
Additional information from the IRS may be found in their article New Exclusion of up to $10,200 of Unemployment Compensation. For Illinois specific information on unemployment compensation, including different filing scenarios, visit IDOR's website tax.illinois.gov.

03/19/2021

Tax Time Guide: IRS reminds taxpayers of recent changes to retirement plans
IR-2021-57, March 16, 2021
WASHINGTON — The Internal Revenue Service today reminded taxpayers about the rules for required minimum distributions (RMDs) from retirement accounts.
A retirement plan account owner must normally begin taking an RMD annually starting the year he or she reaches 70 ½ or 72, depending on their birthdate and maybe the year they retire. Retirement plans requiring RMDs include traditional, Simplified Employee Pension Plan (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) Individual Retirement Accounts; 401(k), 403(b), 457(b), profit sharing and other defined contribution plans.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act changed the age when individuals must begin taking withdrawals from their retirement accounts. Someone born on or before June 30, 1949, was required to start getting RMDs for the year they reached the age of 70½. However, under the SECURE Act, if a person's 70th birthday is July 1, 2019, or later, they do not have to take their first RMD until the year they reach age 72.
The Coronavirus, Aid, Relief and Economic Security (CARES) Act waived RMDs during 2020 so seniors and retirees, including beneficiaries with inherited accounts, were not required to take money out of IRAs and workplace retirement plans. The waiver included RMDs for individuals who turned age 70½ in 2019 and took their first RMD in 2020.
Individuals who reached age 70 ½ before 2020 and were still employed, but terminated employment in 2020, would normally have a 2020 RMD due by April 1, 2021, from their workplace retirement plan. This RMD is also waived as part of the CARES Act relief. Roth IRAs do not require withdrawals until after the death of the owner.
2021 RMDs
Individuals who reached 70 ½ in 2019 or earlier, did not have an RMD due for 2020. For 2021, they will have an RMD due by Dec. 31, 2021. Individuals who did not reach age 70 ½ in 2019 will reach age 72 in 2021 will have their first RMD due by April 1, 2022, and their second RMD due by Dec. 31, 2022. To avoid having both amounts included in their income for the same year, the taxpayer can make the first withdrawal by Dec. 31, 2021, instead of waiting until April 1, 2022. After the first year, all RMDs must be made by Dec. 31.
An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner. Calculating the amount of the RMD depends on the type of IRA or if they are from multiple accounts. Not taking a required distribution, or not withdrawing enough, could mean a 50% excise tax on the amount not distributed.
Some can delay RMDs
Though the April 1 deadline for taking the first RMD is mandatory for all owners of traditional IRAs, participants in workplace retirement plans who are still working usually can, if their plan allows, wait until April 1 of the year after they retire to start receiving distributions from these plans. Individuals who reached age 70 ½ before 2020 and were still employed, but terminated employment in 2020, would normally have a 2020 RMD due by April 1, 2021 from their workplace retirement plan. This RMD is also waived as part of the CARES Act relief.
Employees of public schools and certain tax-exempt organizations should check with their employer, plan administrator or provider to see how to treat these accruals.
Coronavirus-related distributions and loans
The CARES Act made it easier to access savings in IRAs and workplace retirement plans for those affected by the coronavirus. This relief provided favorable tax treatment for certain withdrawals from retirement plans and IRAs, including expanded loan options.
Distributions: Certain distributions made from Jan. 1, 2020, through Dec. 30, 2020, from IRAs or workplace retirement plans to qualified individuals may be treated as coronavirus-related distributions. These distributions are not subject to the 10% additional tax on early distributions (including the 25% additional tax on certain SIMPLE IRA distributions).
Taxes on coronavirus-related distributions are includible in taxable income:
• Over a three-year period, one-third each year, or
• If elected, in the year you take the distribution.
Coronavirus-related distributions may be repaid to an IRA or workplace retirement plan within three years.
If you had an outstanding loan balance in when you left employment, the plan sponsor will usually offset the loan balance against your benefit.
• For loan offsets in 2020, you have until the due date of your tax return (plus extensions) to repay that amount to another retirement plan or IRA.
• If you're a qualified individual, you can treat the loan offset as a coronavirus-related distribution and have three years to repay to an IRA or include in income tax ratably over three years.
RMDs: An IRA owner or beneficiary who received an RMD in 2020 had the option of returning it to their account or other qualified plan to avoid paying taxes on that distribution. RMDs in 2020 that were not rolled over or repaid may be eligible to be treated as coronavirus-related distributions if the individual is a qualified individual. A 2020 RMD that otherwise qualifies as a coronavirus-related distribution may be repaid over a 3-year period or have the taxes due on the distribution spread over three years.
A withdrawal from an inherited IRA to a qualified individual may also be a coronavirus-related distribution. Income from the withdrawal may be spread over three years for income inclusion; however, the withdrawal may not be repaid to the inherited IRA.
IRS Notice 2020-51 PDF provided that the one rollover per 12-month period limitation and the restriction on rollovers to inherited IRAs did not apply to repayments made by Aug. 31, 2020. The RMD suspension did not apply to qualified defined benefit plans.
The CARES Act included special rules for plan loans made to qualified individuals. Plans could suspend loan repayments for up to one year, although, typically, repayments resumed in January 2021. This effectively gives up to six years (instead of five) to repay a typical plan loan.

03/04/2021

Fraudulent fundraiser uses illegal robocalls to harass consumers
March 4, 2021
by Rosario Méndez
Attorney, Division of Consumer and Business Education, FTC
In 2015, the FTC and state partners sued and shut down four sham charities that harassed millions of people with more than 1.3 billion illegal robocalls about donating to charity. The FTC and 46 charity state regulators from 38 states and the District of Columbia are holding the fundraisers that made those illegal calls accountable in a lawsuit announced today.
According to the FTC, Associated Community Services (and some related companies and individuals) called more than 67 million people using illegal pre-recorded messages. Those messages falsely claimed the money would go to support breast cancer patients, the families of children with cancer, homeless veterans, and other people in need. In reality, the FTC says that almost none of the more than $110 million donated between 2016 and 2018 went to help those causes.
The next time you get a call with a pre-recorded message from charity fundraisers, remember these tips:
Don’t trust your caller ID. Dishonest fundraisers can make calls look like they’re from your local area code to get you to answer.
Hang up if you get a robocall with a pre-recorded message from a charity you don’t know. It’s illegal for a charity to call you with pre-recorded messages, unless you’ve donated to them before. In that case, the caller must tell you that you can opt out of future calls and give you a way to do that.
Don’t be rushed. A legitimate charity won’t pressure you and will take your donation at any time.
Ask questions. Ask the fundraiser for the charity’s exact name, web address, and mailing address, so you can confirm it later. And ask exactly how much of your donated dollars will be spent on the charitable cause.
For more tips read Before Giving to Charity. And if you spot a sham charity or a dishonest fundraiser, report them at ReportFraud.ftc.gov.

10/06/2020

IRS extends Economic Impact Payment deadline to Nov. 21 to help non-filers

WASHINGTON – The Internal Revenue Service announced today that the deadline to register for an Economic Impact Payment (EIP) is now Nov. 21, 2020. This new date will provide an additional five weeks beyond the original deadline.

The IRS urges people who don’t typically file a tax return – and haven’t received an Economic Impact Payment – to register as quickly as possible using the Non-Filers: Enter Info Here tool on IRS.gov. The tool will not be available after Nov. 21.

“We took this step to provide more time for those who have not yet received a payment to register to get their money, including those in low-income and underserved communities,” said IRS Commissioner Chuck Rettig. “The IRS is deeply involved in processing and programming that overlaps filing seasons. Any further extension beyond November would adversely impact our work on the 2020 and 2021 filing seasons. The Non-filers portal has been available since the spring and has been used successfully by many millions of Americans.”

Special note: This additional time into November is solely for those who have not received their EIP and don’t normally file a tax return. For taxpayers who requested an extension of time to file their 2019 tax return, that deadline date remains Oct. 15.

To support the ongoing EIP effort, many partner groups have been working with the IRS, helping translate and making available in 35 languages IRS information and resources on Economic Impact Payments.

To help spread the word, the IRS sent nearly 9 million letters in September to people who may be eligible for the $1,200 Economic Impact Payments but don’t normally file a tax return. This push encourages people to use the Non-Filers tool on IRS.gov.

“Time is running out for those who don’t normally file a tax return to get their payments,” Rettig added. “Registration is quick and easy, and we urge everyone to share this information to reach as many people before the deadline.”

While most eligible U.S. taxpayers have automatically received their Economic Impact Payment, others who don’t have a filing obligation need to use the Non-Filers tool to register with the IRS to get their money. Typically, this includes people who receive little or no income.

The Non-Filers tool is secure and is based on Free File Fillable Forms, part of the Free File Alliance's offering of free products on IRS.gov.

The Non-Filers tool is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles who could not be claimed as a dependent by someone else. This includes couples and individuals who are experiencing homelessness.

Anyone using the Non-Filers tool can speed the arrival of their payment by choosing to receive it by direct deposit. Those not choosing this option will get a check.

Beginning two weeks after they register, people can track the status of their payment using the Get My Payment tool, available only on IRS.gov.

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06/12/2020

FRAUDULENT FUNDERS = big woes for small businesses
June 10, 2020
by Lisa Lake
Consumer Education Specialist, FTC
At some point in running your small business or organization, you may need financing to grow or keep things running. That’s a need very much on business owners’ minds right now. But, as you explore financing options, be mindful: Some financing companies lie about their terms, break the law, use terrible debt collection practices, and leave businesses in worse financial conditions than before.

In a lawsuit announced today, the FTC says Richmond Capital offered financing to small businesses, non-profits, and religious organizations, promising they could get a specific amount of money, in exchange for a promise to repay a higher amount from business revenues. Ads for these financing products promised no personal guaranty or up-front costs — but, according to the FTC, Richmond Capital’s promises were false. Instead, says the FTC, people got far less money than they were promised, had to agree to personal guarantees, and paid big up-front fees. And that’s just for starters.

People also signed a legal document called a confession of judgment. This document let Richmond Capital go to court and get a judgment — without any objection or response from the person — if they stopped paying or breached certain provisions of the contract. But according to the complaint, Richmond Capital used these confessions of judgment to go after people’s assets in circumstances not permitted by their financing agreements. What’s worse, Richmond Capital allegedly threatened violence when people didn’t pay. The FTC asked the court to make Richmond Capital stop these practices and refund people’s money.

Small business is an important engine in the US economy. But small companies and organizations can be big business for deceptive funders and outright scammers. So before you get financing:

Read the contract. If there’s anything you don’t understand, ask. Then get the answer in writing.
Find out what the consequences will be if you can’t make payments on time.
Check out funding options for your business at the Small Business Administration’s website.
Learn to avoid small business scams at FTC’s Small Business website.
Tell the FTC about any dishonest practices you experience.
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