From the category archives:

IRS news/announcements

The IRS announced that it has awarded nearly $8 million in matching grants to support its Volunteer Income Tax Assistance (VITA) program. The funds will be divided between 147 organizations in all 50 states and the District of Columbia.

Richard Byrd, Jr., the Commissioner for the IRS Wage and Investment Operating Division, said of the distributions, “We’re proud to support the VITA program and their volunteer tax preparers who provide an invaluable service to millions of taxpayers.”

VITA, which was created in 1969, is a volunteer program which aids low and moderate income taxpayers. Generally, this means individuals and families with adjusted gross incomes of $49,000 or lower. In 2009, more than 3 million tax returns were prepared at nearly 12,000 locations through VITA and the Tax Counseling for the Elderly programs.

You can see a list of organizations which received funds, including the amounts, here (downloads as a pdf).

Notably absent on the list?

HOME-ENV-EDIBLEWREATHS

Yep, ACORN. No surprise here.

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And here’s their evidence:

IRSgraph.jpg

Of course more folks are e-filing. It’s fast, it’s easy. And with more folks than ever with internet and computer access, it’s to be expected.

But.

And you knew there would be a but.

Here’s my cynical take… You’ll note fewer taxpayers filing generally, down a whopping 12 million this year. There’s a bump in 2008 – certainly attributable to the stimulus. Might it be the case – and I’m just saying – that folks have been encouraged to filing electronically in order to get money back a little quicker.

I’d love to see the data for 2009 returns filed in 2010. I’m betting if you back out the homebuyer’s, that percentage will drop a little. And I’m not a betting girl normally. But I have a hunch on this one.

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It looks like 2010 likely won’t be all that different from 2009 – at least when it comes to taxes.

Each year, by law, the dollar amounts for certain tax provisions are indexed for inflation. But inflation hasn’t budged all that much (that’s good, right?) which means that a lot of nothing is happening. Here’s an update on next year’s numbers released by the IRS earlier this month:

  • Personal and dependency exemptions remain at $3,650.
  • The standard deduction for married filing jointly remains at $11,400.
  • The standard deduction for single taxpayers and married filing separately remains at $5,700.
  • The standard deduction for head of household increases by $50 to $8,400.
  • The annual gift tax exclusion remains unchanged at $13,000.

The big kicker, of course, is what the heck is going on with the estate tax? As of now, nobody knows for sure.

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So, who among us didn’t see this coming? IRS Commish Doug Shulman has announced the establishment of a new enforcement unit targeting the very wealthy. The group, called the Global High Wealth Industry, will specifically investigate partnerships, offshore trusts and other techniques used by the wealthy to hide income.

How wealthy is wealthy? Unlike a number of reality TV shows of late, this isn’t about faux millionaires. Try tens of millions of dollars wealthy.

The new enforcement group comes on the heels of a recent amnesty program offered to taxpayers who had been hiding money offshore. Tax pros, including me, viewed the amnesty program as the writing on the wall that the IRS would be ramping up enforcement. A mere two weeks after the extended amnesty deadline, the IRS confirmed that suspicion.

Whether the new enforcement group is a success remains to be seen. Some critics argue that an additional level of administration won’t help – and may, in fact, just confuse matters. But Shulman sees it differently: “You cannot assess compliance among the nation’s wealthiest individuals by looking only at their 1040s…. Our goal is to better understand the entire economic picture of the enterprise controlled by the wealthy individual and to assess the tax compliance of that overall enterprise.”

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Numbers Rolling in for Offshore Amnesty

17 October 2009

The IRS amnesty program for taxpayers who had previously failed to disclose income from offshore accounts ended last week on October 15. By all accounts, it was wildly successful.
According to IRS Commish Doug Shulman, nearly 7,500 taxpayers came forward to make voluntarily disclosures in hopes of avoiding criminal prosecutions. Dollar [...]

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Infant Formula Not a Medical Expense

14 October 2009

It’s somehow appropriate that the IRS would release a private letter ruling regarding a double mastectomy in October (in case you’re not aware, it’s Breast Cancer Awareness month). Here are the facts:
Taxpayer had a double mastectomy. She later gave birth to a healthy baby. As a result of the mastectomy, she was [...]

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IRS Calls for Paper Proposals

3 October 2009

The Internal Revenue Service invites proposals for original papers for the 2010 IRS Research Conference. Topics can include tax compliance, taxpayer burden, improving tax administration, and the nature and behavior of the taxpayer population.
You don’t have to be a tax pro to enter. Proposals are welcome from government and non-government researchers. One [...]

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If You Pay Them, They Will Come

2 October 2009

Here’s a crazy thought: if you give people a financial incentive, you can make them do almost anything (trust me, I watch a lot of reality TV).
For the IRS, the financial incentive comes in the form of increased rewards for turning in tax cheats. A new law, which was established by the Tax [...]

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IRS Scam Emails May Put Your Info at Risk

28 September 2009

By now, you have to have received one of the scam emails purporting to be from the IRS with the subject line: “Notice of Underreported Income.” I’ve received 59 of them just since September 18, 2009. Persistent little spammers.
But if you’re smart or if you follow me on twitter (not that those [...]

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IRS Cuts Ties with ACORN

24 September 2009

The IRS announced on Wednesday that it is cutting ties with ACORN after disastrous video footage was released showing ACORN workers offering inappropriate and flawed tax advice. The IRS will no longer include ACORN in its VITA (volunteer income tax assistance) program:
“The IRS has partnered with hundreds of community and volunteer organizations, including ACORN, [...]

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