Yearly Archives: 2019

The new program requiring the Internal Revenue Service to hire private debt collection agencies is falling far short of its goals and putting taxpayers at risk of falling prey to scammers, according to a new government report.

The report, from the Government Accountability Office, found that the IRS's private collectors recovered less than 2 percent of over $5 billion in debts. The GAO said the IRS's reports to Congress on the private debt collection program haven’t provided complete financial information either. For example, as of September 2018, the IRS reported program revenue collections of about $89 million and costs of $67 million, suggesting a positive balance of $22 million for the Treasury’s general fund. However, the GAO pointed out the IRS report didn’t clarify that approximately $51 million of the amount collected went to the Treasury and the remaining $38 million was retained by IRS in two special funds to pay for current and future program costs.

The GAO said the IRS also hasn't fully assessed the potential taxpayer risks in the program. The IRS has documented six risks, including "imposter scams," in which scammers pose as private collectors, but the GAO has identified 10 additional risks.

The current program is the result of legislation passed by Congress in 2015 with a provision requiring the IRS to set up another private debt collection program. The IRS eventually hired three contractors, and began assigning them cases in April 2017.

The GAO found that the IRS hasn’t analyzed the results of the program to identify the types of cases that should not be assigned to collection agencies because they do not result in collections.

The GAO's analysis of IRS data found that between April 2017 and September 2018 about 73,000 of 111,000 cases closed by collection agencies had little or no revenue collected because the collection agencies weren’t able to contact the taxpayer or collect the debt, among other reasons.

“Given the costs associated with managing these cases, without such analyses, the IRS may continue to use resources inefficiently and assign cases with little or no potential for revenue collection, or miss opportunities to assign other cases that could produce more revenue,” said the GAO.

The IRS has identified and taken steps to mitigate some of the program risks that could harm taxpayers, the GAO acknowledged. However, the service hasn’t yet completed the process of identifying and documenting all the risks, and has not fully assessed the risks to taxpayers from the program or its response to these risks.

An IRS official contended that the program has brought in significant revenue since the IRS began assigning cases in April 2017 to private collection agencies.

She also disagreed with the GAO’s contention that the IRS’s reports to Congress on the program had not provided complete financial information.

A group representing the private tax debt collectors also responded to the report. “The PCA’s welcome effective program oversight, have a strong compliance record, and are always looking for opportunities to improve as the IRS expands the successful Private Debt Collection Program,” said a statement from the Partnership for Tax Compliance. We would look forward to sitting down with GAO staff sometime soon to discuss the program’s proven success.”

 

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Sources

GAO

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IRS's Small Business/Self-Employed Division has issued guidance to its employees IRS Memo SBSE-05-0419-0010 regarding what collection activity information can and cannot be disclosed with respect to a couple's joint return, where the couple has subsequently divorced or are separated and no longer reside in the same household.

If any tax deficiency with respect to a joint return is assessed, the couple are no longer married or no longer reside in the same household, and either joint filer makes a request in writing, IRS must disclose in writing to the individual making the request whether it has tried to collect the deficiency from the other filer, the general nature of those collection activities, and the amount collected. (Code Sec. 6103(e)(8))

Upon receipt of either a verbal or written request from a taxpayer or his authorized representative, IRS may disclose limited information related to the collection of the tax from the other individual with whom the taxpayer filed a joint return when the taxpayer and the other individual are no longer married or are separated and no longer reside in the same household. Verbal requests will be honored if received from either spouse or his/her authorized representative, after verifying the identity of the person making the request to determine his/her right to the information. Disclosures made pursuant to Code Sec. 6103(e)(8) are limited to the specific tax period associated with the requester's joint deficiency, and the information should not be disclosed if its release will seriously impair federal tax administration.

Information that may be disclosed verbally upon receipt of a verbal or written request from a spouse who has been assessed the joint tax include:

1. Whether IRS has attempted to collect the deficiency from the other spouse,
2. The amount collected, if any, and the current collection status (e.g., notice, taxpayer delinquent account (TDA), installment agreement, offer in compromise, suspended), and 
3. If suspended, the reason for suspension. (e.g., unable to locate, hardship, etc.)

Information which IRS employees cannot disclose includes:

1. The other spouse's location or telephone number,
2. Any information about the other spouse’s employment, income, or assets, and/or
3. The income level at which a currently not collectible account will be reactivated.

The guidance provides several examples, including the following:

Illustration 1: Mr. and Mrs. Taxpayer filed a joint return for tax year 2016. They are now divorced and have mirrored assessments under MFT 31 for the year 2016. "Mirrored assessments" is the process of duplicating a joint account into two "MFT 31" accounts, one for each spouse. Mr. Taxpayer recently submitted an accepted offer in compromise (OIC). Mrs. Taxpayer calls in and asks if IRS has tried contacting her husband as he has told her that he owes no more monies for the 2016 tax year. An IRS employee determines that there IRS records show a TC 480, Offer in Compromise Pending and TC 780, Master File Account Compromised posted to her MFT 31 module. While speaking with Mrs. Taxpayer, the employee can tell her that the account does reflect an OIC submission (TC 480) and acceptance (TC 780). He can relay what payments/refund offsets have credited to her MFT 31 and her current outstanding balance.

Illustration 2. Mr. and Mrs. Taxpayer filed a joint return for tax year 2016. They are now divorced and have mirrored assessments under MFT 31 for tax year 2016. Mrs. Taxpayer has a continuous wage levy, and the payments have credited to Mr. Taxpayer’s MFT 31 module. Mr. Taxpayer calls in to ask if IRS is receiving regular payments from his ex-spouse. While speaking with Mr. Taxpayer, an IRS employee can tell him that IRS is collecting monies from Mrs. Taxpayer; each month IRS is receiving $475.00 that is being credited to his 2016 module. The source of payment however, is not shareable. The employee also can relay what payments have credited to his MFT 31 module. The employee can relay his current outstanding balance. He cannot disclose any information about the other spouse's employment, income, or assets.

IRS noted that this guidance supersedes the current instructions found in IRM 5.1.22.3.1.

Have an IRS Tax Problem
With a Former Spouse? 

Contact the Tax Lawyers at 
Marini& Associates, P.A. 
 

for a FREE Tax HELP Contact Us at:

www.TaxAid.com or www.OVDPLaw.com or

Call Toll Free at 888-8TaxAid (888) 882-9243 

 

The Internal Revenue Service reported a $4.4 billion decline in total tax refunds as of April 19, the first tax season under the Tax Cuts and Jobs Act, with the average size of tax refunds down about 2 percent.

The total number of tax refunds increased slightly, from 95,434,000 to 95,737,000, a 0.3 percent increase. The total amount of tax refunds declined 1.7 percent, though, from $265.326 billion to $260.919 billion.

At the same time, the Tax Cuts and Jobs Act also eliminated the personal and dependent exemptions. The IRS recommended last year that taxpayers adjust their withholdings with a "paycheck checkup" using its online withholding calculator to avoid withholding too little this year. Nevertheless, relatively few taxpayers actually

The 2017 tax overhaul eliminated or sharply limited a host of tax deductions, including widely used ones like the state and local tax deduction. Taxpayers can write off only $10,000 in state and local taxes from their federal taxes now. That provision has been attacked by lawmakers in so-called "blue states" that traditionally vote for Democrats. In exchange, the tax law doubled the size of the standard deduction and lowered tax rates overall, prompting more taxpayers to skip itemizing this year.  

2019 FILING SEASON STATISTICS

The vast majority of taxpayers saw their taxes reduced over the course of last year, but many of them didn't notice the difference in their paychecks. The IRS faced complaints from many taxpayers who ended up owing far more money than they expected or getting a lower tax refund than anticipated. In response, the IRS lowered the threshold for imposing tax penalties on taxpayers who underwithheld or paid too little in estimated taxes last year. The IRS is again urging taxpayers to check their withholdings now that tax season is over.

However, the IRS is also planning to roll out a newly revised Form W-4 next month that will again require many taxpayers to adjust their withholdings. They will likely need to get help from tax professionals because it is expected to be even more complicated to use than last year's form. An early draft of the form provoked complaints last year from accounting and tax professional groups because it asked for much more information than usual about outside sources of income from spouses and others.

Have a IRS Tax Problem? 

Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

for a FREE Tax HELP Contact Us at:

www.TaxAid.com or www.OVDPLaw.com 

orToll Free at 888-8TaxAid (888) 882-9243 

 

Sources:
IRS
accountingTODAY