Category Archives: IRS Audits and Litigation

A report from the American Civil Liberties Union, which filed a Freedom of Information Act request to find out whether the IRS is reading your emails without a warrant.

A bit of background is necessary here. When it comes to getting a warrant to read your email, the relevant law is the Electronic Communications Privacy Act, which was enacted way back in 1986. As you might expect, the law is a bit dated: According to the law, a government agency can read your email without a warrant as long as the email has been opened, or if it's been sitting in your inbox for more than 180 days. Only unopened email that's been on the server for less than 180 days requires a warrant.
aware: The IRS says it has the right to go into your account and read them.

It's exactly the kind of arbitrary distinction you might expect from a law written before email was widely used and understood. And accordingly, a Sixth Circuit appeals court ruled in 2010 that in fact, agencies needed to get a warrant before reading any emails, not just those that were new and unopened.

Before that decision, the IRS was certainly opening emails without warrants -- in fact, the ACLU got hold of an internal handbook claiming that the "the Fourth Amendment does not protect communications held in electronic storage."

The question, then, is whether those practices changed after the Sixth Circuit decision.

The ACLU is calling on the IRS to amend its procedures to bring them in line with the Fourth Amendment. In the meantime, just be aware that the taxman might sift through your inbox if he thinks you're holding something back.
 

The IRS is modifying several eligibility requirements, thus making it possible for many more interested employers, especially larger ones, to apply for this program. Thus far, nearly 1,000 employers have applied for the VCSP, which provides partial relief from federal payroll taxes for eligible employers who are treating their workers or a class or group of workers as independent contractors or other nonemployees and now want to treat them as employees. Businesses, tax-exempt organizations and government entities may qualify.

Under the revamped program, employers under IRS audit, other than an employment tax audit, can qualify for the VCSP. Furthermore, employers accepted into the program will no longer be subject to a special six-year statute of limitations, rather than the usual three years that normally applies to payroll taxes. These and other permanent modifications to the program are described in Announcement 2012-45 and in questions and answers, posted on IRS.gov.

Normally, employers are barred from the VCSP if they failed to file required Forms 1099 with respect to workers they are seeking to reclassify for the past three years. However, for the next few months, until June 30, 2013, the IRS is waiving this eligibility requirement. Details on this temporary change are in Announcement 2012-46.

To be eligible for the VCSP, an employer must currently be treating the workers as nonemployees; consistently have treated the workers in the past as nonemployees, including having filed any required Forms 1099; and not currently be under audit on payroll tax issues by the IRS. In addition, the employer cannot currently be under audit by the Department of Labor or a state agency concerning the classification of these workers or contesting the classification of the workers in court.
Interested employers can apply for the program by filing Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before they want to begin treating the workers as employees.

Employers accepted into the program will generally pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year.

No interest or penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years.

Employers applying for the temporary relief program available for those who failed to file Forms 1099 will pay a slightly higher amount, plus some penalties, and will need to file any unfiled Forms 1099 for the workers they are seeking to reclassify.

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

for a FREE Tax Consultation at www.TaxAid.usor www.TaxLaw.ms

or Toll Free at 888-8TaxAid (888 882-9243).