I had a great time on Friday with our “Ask the taxgirl LIVE” segment. I know there wasn’t a lot of notice about it and yes, I heard about it (thanks for your emails and messages).

This was my first time live blogging on Forbes and we had some technical pieces to work out. That said, it went off without a hitch which means that I will definitely do it again. Keep an eye out for future versions. The plan is to focus on certain topics for a couple (i.e. a small biz session, an itemized filer session) and still have a general session or two, as well. I promise to make sure that there’s plenty of notice so that you can participate.

Of course, sorting through emails means that I’m finally sitting down to open up the Sunday Mailbag. Today, I’m tackling most of your tax pro-related questions – with some quick site-related queries and my obligatory sports question, of course.

Taxpayer asks:

I found your site when I was looking for information about rals. I lost my money last year without anyone telling me why and I want to report it. Who do I report it to?

taxgirl says

If I understand you correctly, you believe that part or all of your refund was withheld inappropriately as a result of using a RAL (refund anticipation loan). If that’s the case, there are probably a couple of things you should do before you report it:

(1) Call IRS and find out why your refund was less than anticipated. You might have over-estimated what you thought you’d receive and they can give you the actual numbers for comparison.

(2) Call the Treasury Offset Program Call Center at 1.800.304.3107 if you believe your refund might have been subject to an offset for back taxes, unpaid student loans or child support arrears. They can’t point you in the right direction to find out what the offset might be (they can’t give you the amount but can tell you who to call).

If, after that, you still believe that your refund was mishandled, you can make a complaint to the company in charge of processing your refund/RAL. That’s a good first step. If they won’t do anything to help resolve your issue, consider contacting the Better Business Bureau. You can also check with the agency responsible for overseeing/licensing the preparer. Finally, if you believe the behavior to be criminal, you might want to check in with the Attorney General in your state to see whether there’s an investigation pending for that company/preparer.

But do me a favor, okay? Make sure you check things out on your end first before you file complaints or contact state agencies. I agree that unscrupulous tax preparers need to be stopped. On the chance, however, that there’s a mistake here (either your mistake or an innocent mistake by the preparer), keep in mind that this is the tax preparer’s livelihood. Some of these investigations and accusations have serious consequences to the preparer so you want to be sure that you’re right before you act. Don’t screw up somebody’s life over a misunderstanding.

Taxpayer asks:

Why don’t you have a Google+ button on your site?

taxgirl says:

I’ve been asked this a lot. The short version is that, on Forbes, I don’t control the tech side of things. Share buttons aren’t something I can automatically add as a plugin because they have to be compatible with the rest of the site. But I will ask the powers that be if there’s enough interest.

Along those lines, I’ve also been asked if I’m on Google+. Yes I am. You can find me here. Or just search for me (Kelly Phillips Erb) on Google+. If you want to add me, be sure and tell me that you know me through the blog so that I can pop you into the taxgirl circle. But be forewarned that I don’t hang out on Google+ much at all since I’m not a fan. You have a better chance of catching me on Facebook or Twitter.

Taxpayer asks:

Either the accountant whom filed my taxes or the IRS person in charge printed another persons social security number instead of mine. The person whom the mistaken social security number belongs to owes the IRS a large amount.

The accountant blames the IRS people and has not yet made the correction after 16 months.

What course of action should I take and whom do you think is responsible for this mistake

taxgirl says:

I can’t say who is responsible for the mistake since I don’t know the actual details. However, it is important that you try and fix this mistake as quickly as possible.

If this simply is a transposition/numbers error and your accountant hasn’t been able to move this issue forward in nearly a year and a half, perhaps it’s time to contact someone else. This is the kind of work that tax attorneys who deal in compliance issues handle. It should be a matter of potentially amending your return to reflect the proper number and getting your record cleared/refund issued (or whatever relief you’re seeking).

Taxpayer asks: I’m a tax attorney like you. I don’t prepare many tax returns but around April, I will do a few as a favor to clients. Do I need a PTIN?

taxgirl answers:Gah. Preparing a few returns every year on your own rather than referring them to an accountant sounds like more trouble than it’s worth but I know that’s not what you’re asking. The quick answer to your question is yes. As of January 1, 2011, (last year) all paid preparers must have a Preparer Tax Identification Number (PTIN) before preparing returns; you can find out how to get one here. Attorneys are subject to annual registration, including a fee, but are exempt from the exam and the continuing ed credits since we already had to pass the bar and do CLEs every year. If you want to see the requirements for various preparers, IRS has a nice little chart.

Taxpayer asks: I live in the suburbs near Philadelphia (Delaware County). Can you recommend a local preparer?

taxgirl answers: I have a few folks in Philadelphia and the near suburbs that I’ve worked with and tend to recommend. You can drop me a note (kelly.erb@taxgirl.com) and I’m happy to share those names.

I do know some folks across the country (and am happy to share those names when I can) but I would suggest that you ask your friends and neighbors for recommendations since they’ll have more information that I do. Click here for a few other tips for choosing a preparer.

Taxpayer asks:

Hi taxgirl, I am a huge fan of yours. Do you ever do anything outside of the blog like go on TV or the radio? Do you write anywhere else? Inquiring minds want to know.

taxgirl says:

Thanks for the kind words! This time of year, I appear on TV and radio quite a bit. In the past, I’ve been on local shows like NY1 and Good Day Philadelphia, as well as lots of radio appearances across the country from The Big Dumb Fun Show to Minnesota Public Radio and CBS Market Watch. I try to give my readers a heads up when I know in advance when the pieces will appear – so check back often!

Taxpayer asks:

This Giants fan wants to know: How ’bout them Eagles?

taxgirl says:

Like I didn’t see this one coming… I can’t be responsible for Andy Reid’s play calling. All I can do is take solace in the fact that catchers and pitchers report in 27 days (12 hours and 34 minutes as of this writing, but who’s counting?).

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One more thing before I go: there’s a lot of cool stuff on tap for tax season so be sure to watch the blog, as well as look for updates on twitter and Facebook. I’ll be announcing some great giveaways (there’s one starting next week), tax trivia and tax haiku (one of my favorite bits).

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Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

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• Ask the taxgirl: Rebates and Foreign Jobs

So I’m going to let you in on a little secret: I don’t prepare my own tax returns. Completely true. It is how I stay married.

You see, I used to prepare my own returns for my business and for my household. And I did just fine for a bit. But then I had three kids (and a dog). Those darn kids insisted on stuff like eating every day and having clean laundry and occasionally snuggling on the sofa. Add that to managing my business, writing my blog and occasionally running a few miles and I didn’t have a whole lot of time left over. Oddly enough, my husband felt that I shouldn’t spend the rest of it sorting out our taxes. And – much to his surprise – I agreed.

As much as I’m a control freak, I firmly believe that there’s no shame in hiring someone to help you out. In fact, I highly recommend it. An accountant or other tax professional will usually be able to prepare your simple return for between $200 and $500, depending on the complexity and your geographic location. For me, considering the time value of money (and the intangible value of my time for my family), it’s well worth the cost.

That said, I’m not insisting that you hire a tax preparer. Some folks – God love ‘em – like doing their own taxes. If you can do it on your own – and you want to – for the equivalent of $200-$500 of your own time, then do it. But if you can’t, hire someone.

Choosing a tax professional can be confusing. Here are some tips:

1. Understand what you need. Do you simply need a preparer? Do you need help with tax planning? Are you being audited? Having problems with the IRS? Depending on your situation, you might need an accountant, an attorney, an Enrolled Agent or a CPA – or more than one. We don’t all do the same thing. As a tax attorney, I focus on tax planning and tax compliance issues (appeals, examinations, FBAR reporting). I don’t prepare returns. And many accountants I know? They won’t touch appeals with a ten foot pole. Sort out what you need before you start looking.

2. Ask about qualifications. New regulations require all paid tax return preparers to have a Preparer Tax Identification Number (PTIN) and register with the IRS. Other professionals (like attorneys and CPAs) may have additional licensing requirements. Inquire about education and experience. Ask what those initials on the business cards mean – sometimes, they are more or less made up to look impressive. Yes, you can buy your way into a number of organizations in order to tack on a few suffixes. It is absolutely okay and not insulting to ask about credentials. If your tax preparer doesn’t want to tell you about his or her training, chances are, there’s a reason.

3. Do your homework. Check with professional organizations, licensing agencies and the Better Business Bureau to determine whether any complaints have been lodged against the preparer. Heck, Google around a bit. A complaint isn’t necessarily indicative of any wrongdoing, but you should regard a preparer with a number of complaints with some measure of caution.

4. Get some opinions. It’s weird that people will ask for a gynecologist’s name in a heart beat but will often remain tight-lipped about tax professionals. Ask. Ask your lawyer, your investment advisor, your colleagues and your neighbors who they use for tax preparation and tax planning services. Word of mouth is one of the best ways to find a good tax professional – and a good way to determine who you should avoid. But don’t accept an opinion as gospel (remember, this is a country full of folks who watch the Kardashians on TV so take some opinions with a grain of salt) and do some follow-up on your own.

5. Make sure the bottom line is really the bottom line. Don’t be fooled: bulk tax companies are not always less expensive than professional services firms and they tend to hit you with fees for extras and try to sell you products. If the initial fee is small, ask upfront about add ons, “accuracy guarantees” and more that might cost you money. Remember that “too good to be true” usually is. Don’t be sucked in by promises of huge refunds if you’re not sure that you qualify. And ignore preparers who base their fees on the size of your refund: the IRS has found a disproportionate number of fraudulent preparers use this technique.

6. Bigger Isn’t Always Better. *Insert random off color joke of your choice here.* Now that you’ve stopped giggling like a 12 year old, take my word for it that bigger isn’t always better. Sometimes bigger firms and bigger companies mean more resources. But sometimes they just mean bigger fees. Don’t jump to conclusions about a professional based on the size or sparkle of their office.

7. Choose someone who will stick around. I am not a fan of many bulk tax prep companies because they are gone most months out of the year. You shouldn’t have to make a call to a call center and speak with someone who will inevitably give you the run around if you have a question. I prefer tax preparers that are around more than seasonally – if yours shuts down for the year on April 19, consider finding someone more available.

8. Use your gut. If your calls or emails aren’t returned within a reasonable amount of time (keeping in mind that during busy seasons, wait times will be understandably longer), consider going elsewhere. If the staff is rude, if the tax preparer seems pre-occupied, walk away. You’re paying for a service. You deserve to be treated in a professional manner. Remember that you’re liable at the end of the day for the information on your return, not the preparer. If the preparer isn’t willing to work with you to make you feel comfortable, find someone who will.

9. Nothing lasts forever except maybe Betty White’s career. If things aren’t working out, well, then, they’re not working out. It doesn’t have to be something huge – maybe you just don’t get along. It’s okay to pay your bill and walk away. I’ve done it. Twice. And I still refer folks out to the one accountant; he’s a fine accountant, just wasn’t a good fit for us. This isn’t a “till death do us part” type deal. It’s a professional transaction. And while I believe that it makes the most sense to have a reliable, consistent tax professional (see #7) to depend on, sometimes you’re just not that into him (or her). And that’s okay.

Even if you don’t think you need a tax preparer or a tax attorney, I vote that you make friends with one anyway. No, not just because we’re cute and offer sparkling wit and cocktail party conversations… but because one day, you might need a tax professional.

Here’s what you don’t want to be doing: calling up and saying, “I need to hire an attorney to represent me in an audit. Tomorrow.” And you don’t want to be crouched at the bottom of your closet with the feds banging on your door as you desperately dial up information for the first number you can find. By then, it’s probably too late.

So all of those tips that I just offered for finding a tax pro? Here’s perhaps the most important one to add to the mix: do it now. Not tomorrow. And definitely not the week of April 10th. By that time – and trust me on this – tax professionals are tired. They might be a little cranky. They might not be so quick to return your calls and they might be a little short when they do. And you would be, too, if you’d been fed a daily diet of tax forms for the past four months (tax season officially starts in January).

There’s more to come – including how to read and understand your notices from IRS – as part of this series. If you missed my other best tax advice ever, you can find it here:

• My Best Tax Advice Ever, Part I: Open Your Mail
• My Best Tax Advice Ever, Part II: Get Some Help

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Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

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Dear overeager taxpayers:

As an employer and a tax professional, I am asking you in the nicest way possible: please be patient.

I know you want to file your tax return already. Apparently you’re one of the lucky folks getting a refund this year. And I know you want your money.

But give us some time, okay?

You should receive your forms W-2 and most forms 1099 by January 31, 2012. That’s a couple of weeks yet. For some of us, it’s a couple of long, long weeks.

If that day comes and goes and you haven’t received your forms, you should first contact your employer (or the issuer). It might be crazy easy to fix. You might not have received the form because of an incomplete or bad address, so check to make sure that your info is correct. Or maybe it got lost in the mail. If that’s the case, your employer can simply furnish you with another form. Problem solved. So don’t be nasty or rude about it.

But what about employers who are no longer in business or those that have moved? I still recommend trying to contact your employer. Again, it’s the fastest, easiest solution. If you don’t know where they’ve moved, try putting something in writing to the last known address: it’s quite possible that there is a forwarding order at the post office. Businesses that have wrapped up their affairs are not excused from filing their tax forms so some arrangements should have been made to take care of these matters. Don’t assume that’s not the case.

If after all of that, you still don’t have your forms (or if your forms aren’t correct), contact the IRS. But don’t jump the gun: the IRS does not want to hear from you about missing forms until after February 14. Then, consider it your little love note to them on Valentine’s Day. Contact the IRS by calling 1.800.829.1040. You’ll need to have your personal info handy, including address, phone number, Social Security Number, your dates of employment and the name, address and phone number of your employer. Do yourself (and the IRS) a favor and have all of that info together before you call. You don’t want to sit on hold for an hour and then find out that they can’t help you because you don’t have the right info.

After you contact them, the IRS will contact your employer (or the form issuer) with a form 4598, Form W-2, 1098 or 1099 Not Received, Incorrect, or Lost. You’ll receive a copy of the form 4598, along with a form 4852, Substitute for Form W–2 or Form 1099–R. If your employer is smart, they’ll send your docs right out to you. But if they’re not? If you still don’t receive your form W-2 after all of that, you should use file a form 4852 (downloads as a pdf). But that will definitely slow down the preparation of your return: the IRS requests that you not file the form 4852 until April 17.

But remember at the beginning when I said “most forms 1099″? There are some exceptions to that January 31 deadline. You might not receive some info by the January 31 deadline on purpose. Those include forms 1099-B, 1099-S and 1099-MISC (if amounts are reported in boxes 8 or 14): those are due to taxpayers by February 15. The February 15 deadline also applies to statements furnished as part of a consolidated reporting statement. You should also expect, as stragglers, Schedules K-1 from partnerships and pass through entities. A good rule of thumb: if you’re a beneficiary of a trust or estate, or a shareholder, partner or member of an LLC, LLP, s corp or other small company, give a quick call to the person in charge to find out when you can expect your forms. But don’t pester. Pestering is rude. And it won’t get you anywhere.

And do me one more favor: do not – I repeat, do not – attempt to file your returns until you’ve received your forms. I know it’s tempting. I know you think you know what’s on those forms… but what if you’re wrong? What if you’ve missed something? Not only are you making it hard on your preparer when you ask them to decipher your year end check stub or your year end investment statement, you’re asking them to break the rules: the IRS specifically prohibits preparers from submitting electronic returns prior to the receipt of all Forms W-2, W-2G and 1099-R.

You’re also begging for an audit. Begging. At the most basic level, the IRS matches your forms W-2 and forms 1099 to your tax returns. And if they don’t match, they’re going to want to know why. My mom – who is right almost all of the time – used to tell me that it was okay to be different. That might be true in junior high but it’s not true at the IRS. Trust me. You want your return to look like every other return. Don’t give the IRS a reason to pull yours out and look at it again.

Let’s be careful out there.

Sincerely,

taxgirl

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Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

• Ask the taxgirl: Where are my tax forms?
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Last week, I advised that my best tax advice ever was to open the mail from the IRS. I find that to be, for many taxpayers, the single hardest thing to do.

Of course, opening the mail isn’t always enough. Generally, the notice or letter advises you to take some sort of action, whether that’s send a copy of a check or receipt, make a payment or contact the IRS. With respect to the latter, that’s the sort of thing that stops many taxpayers dead in their tracks. They don’t want to have to communicate with the IRS in any way. The good news is that you don’t always have to: you can have your tax professional or other third party do it for you.

Before we go any further, you have to understand that the IRS has some pretty serious privacy rules. They won’t talk to just anybody about your tax account and even then, they are limited in what they can (and will) share with you or a third party.

There are a few basic options for allowing a third party to contact the IRS on your behalf:

1. Third Party Designee. If you want someone else – your tax preparer, a friend, a family member, or any other person – to be able to discuss your tax return with the IRS, you can designate that person directly on the return using the space provided just above the signature line:

The authorization is limited to the specific tax year and tax return that you’re signing. The designation will automatically end no later than the due date (without regard to extensions) for filing the next year’s tax return.

2. Tax Information Authorizations.

Remember, federal tax returns are private. There may be a situation when you want to authorize a third party to review your tax return information but don’t wish for them to represent you before the IRS (used, for example, in some administrative law situations). In that event, you can file a federal form 8821, Tax Information Authorization. This form is not currently available on the IRS website.

Similarly, if you want to allow a third party to view your tax history or tax transcript but not authorize them to represent you before the IRS (such as, for example, mortgage company requests to ensure that you’re compliant), you can file a federal form 4506T, Request for Tax Transcript of Tax Return (downloads as pdf), and note the authorization at line 5:

Be sure and read the fine print: The IRS has no control over what the third party does with the tax information. You should also complete lines 6 through 9 of the form to protect your privacy.

3. Notice Concerning Fiduciary Relationship. The IRS has a special form to use when a fiduciary is involved, the federal form 56, Notice Concerning Fiduciary Relationship (downloads as a pdf). Fiduciaries are folks such as trustees, executors, administrators, receivers and guardians who are legally allowed to act on behalf of taxpayer who is an entity (such as a trust or estate) or other person (such as someone who lacks capacity). It’s important to note that this is a bit different from merely representing the taxpayer; a fiduciary actually stands in the position of the taxpayer. Nonetheless, the form 56 must still spell out with some specificity which tax years and tax returns are covered by the authorization. And like the other authorizations, it may be terminated or revoked.

4. Power of Attorney. If you want someone else – your tax preparer, a friend, a family member or certain other persons – to be able to discuss tax matters with the IRS for a specific year or years, you can complete a federal form 2848, Power of Attorney and Declaration of Representative (downloads as a pdf).

A federal form 2848 is to authorize an individual to represent a taxpayer before the IRS. This is most commonly used for tax attorneys, CPAs and Enrolled Agents who are handling tax matters for you but also includes the following:

For tax pros who are familiar with the 2848, it’s worth pointing out that the forms have been recently updated. The new form includes a new designation for registered tax return preparers and the designations for student attorneys and student certified public accountants have been combined into one designation. Additionally, lawyers now have to include their license numbers in the jurisdiction of practice.

The powers granted to under the 2848 are fairly broad and unless specifically excluded on the form, include the right to receive and inspect confidential tax information and to perform all acts, including signing consents and waivers, that a taxpayer could do. Unless otherwise noted, however, it does not include the power to receive a check, substitute or add another representative or sign basic tax returns.

Forms 2848 can be terminated or revoked at any time by the taxpayer. Additionally, signing a new form 2848 revokes the old one unless you specifically say otherwise and attach one that you want to remain in effect.

The IRS claims that it will accept a power of attorney other than a federal form 2848 provided the document satisfies the requirements for a power of attorney. In most cases, this would include your General Durable Power of Attorney prepared by your attorney. I will say, however, that it has been my experience that using a power of attorney instead of the IRS form can be complicated and time consuming so as a rule, I tend to avoid those when possible.

So, now you know that there are lots of ways to have someone else help you out when it comes to talking with the IRS or accessing your tax account. With that in mind, here are a few golden rules of representation:

1. Authorizing someone to represent you does not relieve you of your tax obligations. This is the most important rule of all. You cannot simply just hand over your tax forms and assume it’s done. There’s still work to be done.

2. Think before you sign. Do your homework before you give anyone – from your dearest relative to the most highly recommended tax attorney – the right to access your tax information. Think about what you’re doing and why. What’s the ultimate goal? What is the third party doing for you that you cannot? And is that person the best person for the job? I am not going to tell you what to do but I will say that I rarely recommend authorizing family members to talk to the IRS on your behalf because I think it leads to a lot of awkward Thanksgiving dinners. I generally recommend finding a tax professional to help you out for the same reason that I go to a doctor when I have an illness.

3.  Don’t have a misplaced sense of privacy. The IRS has lots of rules about how they guard your privacy. Your uncle or best friend doesn’t have to play by those rules. If you give a third party the power to review your private tax information, keep in mind that they may share your information with other people. Is it a rotten, terrible thing to do? Sure. Is it legal? Depending on who it is, probably (attorneys and other tax pros are held to different standards than your friends, family and even companies). And once the information is “out there”, it’s out there, like a bad Facebook status. You can’t take it back.

4.  Stay involved. I get that you don’t want to talk to the IRS – that’s why you gave someone else the power to do that for you, right? But that doesn’t absolve you of the responsibility to follow-up. The liability is still yours (see #1). And those deadlines? Still there. Don’t just walk away after you sign an authorization. Follow-up with the third party. And if you don’t get answers, ask more questions. And if you still don’t get answers? I think you know what you have to do.

Every taxpayer is different. And how you respond (or don’t respond) to notices and letters from the IRS will be different. But you need to open your mail. And if you need a little bit of help responding, now you know how to authorize third parties to contact the IRS on your behalf. The rest is up to you.

There’s more to come – including how to find a tax pro and to read and understand your notices from IRS – as part of this series. Stay tuned!

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Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

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A client contacted me this week with a tax problem. He sent over a big pile of correspondence that he had received from the IRS. On the front of one of the letters, it read in big letters: Last Date to Respond to this Letter: XXXX 2011.

Um, it’s 2012.

The client missed the deadline. It’s a common mistake, one that I deal with on a pretty regular basis. And 9 times out of 10, the reason is quite simple: the taxpayer didn’t open the mail.

I get it. It’s scary to get something from IRS. So the whole “I’ll just ignore it” mentality kicks in for taxpayers. They let the letters pile up. They refuse to go to the post office to pick up the certified letter. Sometimes, they even leave the letters on the stoop (for my friends in the South, that’s your top step). At my office, it’s not unusual for clients to drop piles of unopened mail from IRS on my desk during an appointment – yes, I’ve even had clients bring in Samsonite luggage full of Certified Mail, completely sealed.

But here’s the thing. While I understand why it happens (usually fear, paranoia, panic and even depression), letting that mail sit is the single worst thing you can do when it comes to tax matters. This is a case of what you don’t know, could actually hurt you.

When you get a letter from IRS, take a deep breath and open the envelope. It’s rarely as bad as you think. Sometimes it’s an informational letter (advising you, for example, that you might need to file a certain form), sometimes it’s simply a notice of adjustment and occasionally, you’ll receive a notice of deficiency. What’s most important to remember is that IRS correspondence is generally time sensitive – there are deadlines. And IRS deadlines are a big deal. Those deadlines affect your appeal rights and collections activities.

Depending on what the notice says, you may need to take action. Maybe you need to confirm a Social Security number or send a copy of a canceled check or other receipt. Maybe you owe some more money – or maybe the IRS owes you money (it happens). Maybe you need to write a letter or make a phone call. And this is the important part: despite the story that I posted about an IRS rep who hung up on me – on purpose – I’m still going to advocate that you contact the IRS when you have a problem. Or if there’s a notice. Again, ignoring the problem doesn’t make it go away and usually makes it worse.

I’m going to let you in on a little secret: the IRS is staffed with real people. They have friends and families and lives, too. Believe it or not, their job isn’t to make your life miserable. Most of the time (and yes, I’m admitting this out loud), they really do want to help. But as cliche as it sounds, they can’t help you if you don’t contact them.

Those liens and levies? Stories about seizures? Those don’t happen without some effort from the IRS to notify taxpayers. The IRS has a whole set of procedures. They can’t levy indiscriminately. They can’t seize your property without notifying you that there’s a problem.

And yes, there are exceptions. I make my living dealing with a lot of those exceptions. But many times, starting with opening and responding to the the mail would have changed the outcome of a lot of the horror stories you hear. Trust me.

To contact the IRS about your tax account, start with your notice or letter. Generally, there is an address on the top left hand corner and a contact name and/or phone number in the top right hand corner. That’s the best contact to use because the folks at that number will understand what’s going on with your account. But if you’ve lost the notice or you have another issue, try these contact points:

• If you’re calling about your individual tax account, call toll free, 1-800-829-1040, Monday – Friday, 7:00 a.m. – 7:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).
• If you’re calling about your business tax account, call toll free, 1-800-829-4933, Monday – Friday, 7:00 a.m. – 7:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).
• If you’re calling and you have a hearing impairments, call toll free, 1-800-829-4059 (TDD), Monday – Friday, 7:00 a.m. – 7:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).
• If you live outside the United States, the IRS has full-time permanent staff in 4 U.S. embassies and consulates (Frankfurt, Germany; London, UK; Paris, France; and Beijing, China). These offices have tax forms and publications, can help you with account problems, and answer your questions about notices and bills. Check out the International Services page on the IRS web site for specific contact information in these countries. Otherwise, telephone (267.941.1000), Monday – Friday, 6:00 a.m. – 11:00 p.m. (EST), or fax the [entity display="Philadelphia" type="place" active="true" key="pa/philadelphia"]Philadelphia[/entity] Service Center office at 267.941.1055.
• You can also visit a IRS Taxpayer Assistance Center. To find the office nearest you, click here.

You have lots of options. So, what if you still can’t bring yourself to pick up the phone or send a letter? Have your tax professional or other third party do it for you. I’ll address how to do that – as well as how to read and understand your notices from IRS – as part of this series. Stay tuned!

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Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

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At tax time, many taxpayers feel like they’re being ripped off by Uncle Sam. However, IRS is concerned that they might also be victims of those paid to help them: tax preparers. As a result, new rules governing the preparation of tax returns have been in the works for nearly three years with the first phase of the regulations implemented in 2011.

The efforts thus far to get paid tax return preparers to comply with the new rules have had mixed results. As of July 2011, more than 700,000 paid tax return preparers have registered with the IRS and obtained a PTIN. That means that about 1 out of every 8 – or about 12.5% – of the nation’s professional tax return preparers failed to comply with new regulations for 2011.

And those that have registered may not be as professional as you would think. An audit on PTIN applications by TIGTA, the Treasury Inspector General for Tax Administration, offered some surprising results. The audit revealed, among other concerns, that 962 PTIN applicants who have been in jail on felony convictions within the last 10 years received active or provisional PTINs. Of those, a whopping 77% (745 applicants) had not disclosed the felony conviction on their application.

About a third of those felons granted active or provisional PTIN holders were actually in prison when they received their PTINs.

And it gets better: 43 of the applicants which received active/provisional PTINs are serving life sentences. None of them disclosed their felony convictions on their application.

Would it have made a difference? Probably not. Current regulations do not prohibit prisoners from registering and obtaining PTINs.

Feel safer now?

I haven’t been a huge fan of the regs for the same reason that I think ethics classes for lawyers are silly: those folks who are inclined to cheat are going to cheat no matter the rules and the rest of us shouldn’t have to pay for their sins. Nonetheless, the IRS is soldiering on with preparer fees, exams and continuing education requirements.

If it makes you feel better, the IRS has decided that (*cough*) prisoners will not be issued PTINs and those who were issued PTINs will have them suspended (*cough again*). As of the report, however, the IRS doesn’t have a fix and is, instead, actively working on solutions. In addition, the IRS plans to match PTIN applicants to the list of individuals who have IRS Criminal Investigation convictions and individuals permanently enjoined from preparing tax returns.

Yeah. I’m pretty amazed that they weren’t doing it to begin with, too.

The IRS has struggled with how to deal with taxpayer privacy issues and scams involving prisoners for years. Prisoners are cheating the IRS out of millions every year: Sen. Sherrod Brown (D-OH) puts the amount of improperly generated refunds at $124 million though the IRS believes it is likely more than twice that amount. And it’s getting worse, not better: the number of fraudulent prison returns has tripled in the last five years.

Clearly, those most to blame are those prisoners who, despite being in prison, apparently can’t stop breaking the law. But I would also suggest that if the IRS focused efforts on, say, chasing those that they know are a risk rather than blanketing tax professionals, the result for tax professionals and taxpayers would be better.

For more on what TIGTA found in its audit on tax preparer compliance with the new regs, you can read the December 2011 TIGTA report here (downloads as a pdf).

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Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

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While some indicators point towards an economy on the mend (including steady inflation rates and strong Black Friday sales), it’s clear that many Americans are still financially strapped. This has been particularly evident over the past few weeks as my email inbox has been chock full of questions about whether H&R Block will be offering their traditional Christmas loans in 2011.

Increasing pressure from the feds has limited the ability of many companies to offer advance loans, including those refund anticipation loans (RALs) from H&R Block. RALs (and similar lending products) are essentially loans secured by the promise of a tax refund. In the case of the Christmas loans, H&R Block offered loans in November and December which would be paid by the borrower in installments as agreed or by having the borrower sign over a portion of his or her tax refund. A typical Christmas loan in years past, based on anecdotal evidence provided by my reader, seemed to be about $900. The loans were generally used to buy Christmas gifts and were paid back in early January or February (when forms W-2 and 1099 were issued). After the loan was paid from the taxpayer’s refund amount together with interest, fees for tax preparation products and tax preparation services were generally subtracted and the balance, if any, was issued to the consumer in some form (check, debit card, direct deposit, etc.). If the taxpayer owed more than his or her refund, he or she would pay the difference.

Beginning this year, the IRS no longer provided tax preparers, banks and lenders with the “debt indicator” that these lenders use to determine eligibility for RALs. The debt indicator is an electronic acknowledgment to tax preparers advising whether any part of a taxpayer’s refund has been earmarked for offset due to outstanding tax debts or priority obligations such as unpaid child support or delinquent student loans. In previous years, the IRS provided this information, free of charge, to third party preparers, who then made the decision to offer a variety of loan products depending on the answer.

With increased defaults on these loans, pressure to reduce interest and fees for the loans and a lack of a free debt indicator, many of the traditional loan products have been scaled back. H&R Block no longer advertises a “Christmas loan” (at least not in my area of the country) but rather touts its Emerald suite of products. This includes the Emerald Advance Line of Credit which is a year-round line of credit of up to $1,000 which can be repaid with a portion of your tax refund. The loans appeal to holiday shoppers with the promise of quick cash at the end of the year. However, Block is clearly tying the loans to tax refunds by stating the line of credit must be paid down in full by February 15 of each year.

The loan is subject to credit and underwriting approval. As a result, I have heard that the acceptance rate for the loans is much lower than in years past.

If you follow the blog, you’ll recognize that I’m not a fan of these loans. I’ve heard all of the reasons why folks want/need them and I get it. I still find them to be largely abusive. I think they unfairly target the poor and I think that those who offer the loans often skew the benefits of the loans while failing to mention a few money-saving alternatives.

If you’re considering applying for a “Christmas loan”, RAL or other loan secured by a tax refund, I would urge you to think about these strategies:

1. Adjust your withholding. If you’re getting a big refund at the end of the year, that means (in most cases) that you’re having too much money withheld from your paycheck. It’s your money. You’d do better to take a little bit out as you go through adjusting your withholding than waiting for a lump sum at the end (after all, the IRS isn’t going to pay you interest for keeping your money all year). I know this is one of those things that sounds complicated but it’s not. You can ask your tax pro for recommendations or if you’re not sure where to start, grab a copy of your last tax return and your most recent pay stub and head over to the IRS withholding calculator. You’ll make any changes on a federal form W-4 (downloads as a pdf). In most cases, if the change is for the current year, your employer must put your new form W-4 into effect no later than the start of the first payroll period ending on or after the 30th day after the day you turn in the form. However, since it’s already so late in 2011, the change will not affect your 2011 tax year, just your 2012 tax year.

A quick note: If you rely on the EITC for the lion’s share of your refund and you have, in prior years, elected to receive advanced EITC (sometimes called AEITC or AEIC), you may longer do that. The [entity id="section_92" style="padding: 1px; color: #fff; background: #336699;" class="forbes_entity" active="true" item_id="section_92" key="/education" display="Education" natural_id="channel_6section_92" type="section" active="false"]Education[/entity] Jobs and Medicaid Assistance Act of 2010 signed into law repealed the Advance EITC; this means that for 2011, workers cannot receive Advance EITC in their paychecks.

2. Research loans which are not tied to tax refunds. You may not be in a position to get another loan – but there’s no harm in looking, right? It may be that you would qualify for a short term loan that you could pay back with your tax refund without shelling out extra money for tax prep through a consumer preparer with an incentive to sell you a loan. The IRS offers free tax prep services for more than half of taxpayers. If you e-file and rely on direct deposit (or, if you don’t have a bank account, you might qualify for one of the new debit cards from IRS), you can get your refund back in as few as 8 days after filing – with no fees or interest! You can then use that money to repay your loan. In most cases, you should come out ahead.

3. Open a savings account. One of the excuses that I often hear from taxpayers about waiting for a big refund check in January or February rather than taking it out by lowering withholding (see #1 above) is that a refund check acts like a forced savings account. Why not open an actual savings account then? With increased competition from banks and credit unions, it’s even easier to open a savings account than before with lower (or zero) fees and no minimum balances available. And, with direct deposit, you could route funds directly to your savings account – if it’s not in your hands, you won’t be as tempted to take it. Figuring the amount to save is simple. Look at your last few refund checks. Take the average (let’s say $1500 for our example) and divide it by the frequency of your pay (if you’re paid weekly, that would be 52). In our example, that works out to $28.85 per week. Bonus? You’ll earn interest (the IRS won’t give you away) instead of paying it.

4. Don’t cheat yourself out of deductions and credits. In the rush to get a refund back quickly, many taxpayers rush through their returns or rely on schlocky tax preparers. There are many options for finding free tax prep services, many of which have been trained or approved by the IRS. You shouldn’t underestimate the value in regularly utilizing the services of a tax professional – knowing about your individual circumstances makes it easier to make recommendations and find deductions and credits that your might be missing.

5. Spend less. I know that sounds patronizing and hokey. And if you’re like my kids, you’re rolling your eyes. This year, I’ve watched both my dad and my father-in-law fight serious health problems. A dear friend lost his mother and another, her father. Life is short. And in my line of work, I’ve seen money problems destroy marriages and families, crush dreams and take a toll on personal sanity. In the end, it’s not about the presents. It’s about appreciating what you have. And yes, we’d all like one more pair of shoes or another game for the DS. But if that doesn’t happen, life goes on.

I’m not going to tell you not to use a RAL. You know what is most appropriate in your own circumstances. But I will say this:  if you’re going to make the decision to use a RAL, make it for the right reasons – not because you think that it’s your only choices or because you feel too intimidated to ask questions. You owe it to yourself to know what your options are before you act.

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Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

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Well that was quick.

Days after the IRS sent out copies of the Notice 4809 to 21,000(ish) tax preparers, complaints were already flying. One tax preparer crafted this response to IRS Commissioner Doug Shulman while others took to Twitter and other [entity id="section_76" style="padding: 1px; color: #fff; background: #336699;" class="forbes_entity" active="true" item_id="section_76" key="/social-media" display="Social Media" natural_id="channel_3section_76" type="section" active="false"]Social Media[/entity] sites to complain.

It appears that the IRS was listening. This week, on the official Facebook page for the IRS Return Preparer Office, the IRS posted the following message:

We have received numerous inquiries and feedback about the recent Letters 4809 we sent to some preparers. The intent of the letter was to notify certain preparers that some clients’ returns contained entries far beyond average ranges. We are reviewing the feedback we have received and will followup with additional communications soon.

So there you have it.

Thanks to all of you who have chimed in and shared your stories with me. Keep watching this space for updates.Similar Posts:

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The IRS is forging ahead as part of its master plan to increase oversight of tax preparers across the country. In addition to Preparer Tax Identification Number (PTIN) registration, the IRS will require certain paid tax preparers to pass a competency test by December 31, 2013.

It’s the certain in the phrase “certain tax preparers” that’s still causing controversy. Enrolled Agents (EAs), Certified Public Accountants (CPAs) and attorneys are exempt from the new testing and education requirements since the IRS believes that these groups already have stringent guidelines in place.

Those tax return preparers who do not have the EA, CPA or attorney designation – or are otherwise exempt – must pass the competency test by the deadline. If they do, they will be designated as a Registered Tax Return Preparer. To maintain the designation, those tax return preparers must complete 15 hours of continuing education credits each year and renew their PTINs.

The fee for the test is $116 which includes a cut for a third party vendor, Prometric. This fee is in addition to the fee for PTIN renewal. Yup, it’s getting a whole lot more expensive to do returns these days.

Test scheduling begins next week (way to start off the holiday season, right?) and can be done using the online PTIN account at www.irs.gov/ptin (payment is due at the time you sign up). If you don’t have an online PTIN account, you can schedule an appointment and pay for the test by calling 855-477-3926.

The test will cover the form 1040 and related schedules. You can find out more information about what’s included on the test from this prior post.

I’m no test maverick so I will admit to not having a complete understanding of how these things are decided but the initial word on results is a bit confusing. Apparently, the guinea pigs who sign up in the beginning won’t receive their test scores for two to six weeks; this will “allow the IRS to validate the exam and determine the pass/fail cutoff.” After those details are worked out, future test-takers will receive their scores immediately upon completing the test.

It’s clear that there are some kinks to be worked out. I know a lot of tax pros have concerns about how smoothly the testing will go – especially after the fiasco that was the initial PTIN registration. It has to be better this time, right?

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Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

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Aww shucks (*blushing*). The nice folks at LexisNexis have advised that my blog at taxgirl.com has been selected as one of the LexisNexis Top 20 Tax [entity id="section_84" style="padding: 1px; color: #fff; background: #336699;" class="forbes_entity" active="true" item_id="section_84" key="/law" display="Law" natural_id="channel_5section_84" type="section" active="false"]Law[/entity] Blogs of 2011.

The voting for the top blog begins now. You can vote for your favorite (*clears throat*) by following this link. You have to be registered in order to vote; if you haven’t already registered, follow this link to create a new registration or sign in with credentials from your favorite social media site (like twitter or Facebook). Registration is free and I’ve been promised that you won’t receive solicitations when you sign up.

Voting ends on November 28, 2011. I’d be honored if you could take a moment before then and and check the box for taxgirl. Thanks!Similar Posts:

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