Today the Internal Revenue Service issued a warning about the rising threat of impersonation scams that are targeting older adults by pretending to be the IRS, Social Security Administration, or Medicare. 

By spoofing caller IDs, scammers can deceive victims into believing they are receiving legitimate communications. A common tactic is to create a sense of urgency, demanding that victims take immediate action and usually insist on unconventional payment methods, including cryptocurrency, wire transfers, payment apps or gift cards. 

Remember, the IRS will never demand immediate payment without allowing opportunities to dispute or appeal the amount owed, nor will they request credit, debit or gift card numbers over the phone. The IRS will never threaten to involve local police or other law enforcement agencies.

If you are uncertain about the legitimacy of IRS communications, do not return a call. Instead contact IRS customer service for verification. 

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The Internal Revenue Service has released first look at a draft of the new Form 1099-DA that will be used at the beginning of the 2026 filing season (meaning that this will take effect at the beginning of 2025) for reporting digital asset transactions.

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This new approach effects businesses that engage with self-employed individuals. Federal and State agencies are joining forces to assess penalties (including back wages and potential damages) to combat misclassification of W-2 employees as independent contractors.

For more information you may contact us to set up a consultation.

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For individuals, the rate for overpayments and underpayments will be 6% per year, compounded daily, up from 5% for the quarter that began on July 1. Here is a complete list of the new rates:

• 6% for overpayments [5% for corporations]. (payments made in excess of the amount owed)
• 5% for the portion of a corporate overpayment exceeding $10,000.
• 6% for underpayments. (taxes owed but not fully paid)
• 8% for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, for a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points, and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced on August 15th are computed from the federal short-term rate determined during July 2022.

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• Lowers ACA health care premiums for millions of Americans while extending the expanded ACA coverage through 2025
• Introduces a 15% corporate minimum tax and closes the carried interest loophole to make the biggest corporations and the ultra-wealthy pay their “fair share”
• Funds greater enforcement of the tax code by providing the IRS $124 Billion for enforcement
• Allows Medicare to negotiate drug prices and caps out-of-pocket costs to $2,000
• No new taxes on families making $400,000 or less
• No new taxes on small businesses

Note: Congress must have been persuaded by the problems the IRS backlogs have caused and will continue to cause, until improvements are made. So here comes the Calvary. $124,000,000,000, (Billion). That’s a lot of improvements. 

It’ll take a bit of time but you should start seeing changes in 2023. From then on the IRS will transform enforcement dramatically, but what about clearing the back log? That too. But the main target will be collecting the estimated $365 Billion dollar short fall in unreported and uncollected taxes. 

So, everything is lining up. The money is there and the incentive is there. That means this will be a game changer. Possibly the likes of which we have not seen before. 

The IRS will become a lean mean cash machine. And… there might be a silver lining; If the IRS is raking in the dough from uncollected taxes, Congress may not need to raise taxes. The new found money can solve a lot of problems; shore up Social Security and have funds left over to run the country, or vice-versa. Either way would be an improvement.    

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As the new school year begins, the Internal Revenue Service reminds teachers and other educators that they’ll be able to deduct up to $300 of out-of-pocket classroom expenses for 2022 when they file their federal income tax return next year.

This is the first time the annual limit has increased since the special educator expense deduction was enacted in 2002. For tax years 2002 through 2021, the limit was $250 per year. The limit will rise in $50 increments in future years based on inflation adjustments.

For 2022, an eligible educator can deduct up to $300 of qualifying expenses. If they’re married and file a joint return with another eligible educator, the limit rises to $600. But in this situation, not more than $300 for each spouse.

Who qualifies?
Educators can claim this deduction, even if they take the standard deduction. Eligible educators include anyone who is a kindergarten through grade 12 teacher, instructor, counselor, principal or aide in a school for at least 900 hours during the school year. Both public and private school educators qualify.

What’s deductible?
Educators can deduct the unreimbursed cost of:

• Books, supplies and other materials used in the classroom.
• Equipment, including computer equipment, software and services.
• COVID-19 protective items to stop the spread of the disease in the classroom. This includes face masks, disinfectant for use against COVID-19, hand soap, hand sanitizer, disposable gloves, tape, paint or chalk to guide social distancing, physical barriers, such as clear plexiglass, air purifiers and other items recommended by the Centers for Disease Control and Prevention.
• Professional development courses related to the curriculum they teach or the students they teach. But the IRS cautions that, for these expenses, it may be more beneficial to claim another educational tax benefit, especially the lifetime learning credit. For details, see Publication 970, Tax Benefits for Education, particularly Chapter 3.

Qualified expenses don’t include the cost of home schooling or for nonathletic supplies for courses in health or physical education. As with all deductions and credits, the IRS reminds educators to keep good records, including receipts, cancelled checks and other documentation.

Reminder for 2021 tax returns being filed now: Deduction limit is $250
For those who received a tax filing extension or still need to file a 2021 tax return, the IRS reminds any educator still working on their 2021 return that the deduction limit is $250. If they are married and file a joint return with another eligible educator, the limit rises to $500. But in this situation, not more than $250 for each spouse.

File electronically when ready. Tax-filing software uses a question-and-answer format that makes doing taxes easier. Whether a return is self-prepared or prepared with the assistance of a tax professional or trained community volunteer, the IRS urges everyone to file electronically and choose direct deposit for refunds. For details, visit IRS.gov/efile.

In addition, the IRS urges anyone who owes taxes to choose the speed and convenience of paying electronically, such as with IRS Direct Pay, a free service available only on IRS.gov. For information about this and other payment options, visit IRS.gov/Payments.

Taxpayers who requested more time to file an accurate return have until Oct. 17, 2022. Those who have what they need to file, however, should file as soon as possible to avoid delays in processing their return. Taxpayer are urged to file electronically when they are ready and avoid the last-minute rush to file at the deadline.

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The Internal Revenue Service today released a new five-year Strategic Plan that outlines its goals to improve taxpayer service and tax administration.

The IRS Strategic Plan FY2022-2026 will serve as a roadmap to help guide the agency’s programs and operations. The plan will also help meet the changing needs of taxpayers and members of the tax community.

“Through the Strategic Plan, we want to share our priorities and how they shape the important work that takes place at the IRS, year in and year out, to help taxpayers,” said IRS Commissioner Chuck Rettig. “We serve and interact with more Americans than nearly any other public or private organization. The IRS has undergone tremendous change over the last five years, and we continue to evolve to better serve the nation’s taxpayers.”

The Strategic Plan, developed with input from external partners as well as IRS employees, focuses on four goals that will help improve customer service:

• Service – Provide quality and accessible services to enhance the taxpayer experience.
• Enforcement – Enforce the tax law fairly and efficiently to increase voluntary compliance and narrow the tax gap.
• People – Foster an inclusive, diverse and well-equipped workforce and strengthen relationships with our external partners.
• Transformation – Transform IRS operations to become more resilient, agile and responsive to improve the taxpayer experience and narrow the tax gap.

As the IRS works to achieve these goals, it will continue to uphold taxpayer rights and enforce the tax code fairly to improve the taxpayer experience. Under the Taxpayer Bill of Rights, every taxpayer has fundamental rights of which they should be aware when dealing with the agency.

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When a math error or similar notice is generated in connection with a paper-filed tax notice/ return, the combination of the return processing delay and the correspondence processing delay may mean that the taxpayer must wait well over a year to get the issue resolved.

The IRS report also notes that taxpayers who are trying to resolve identity theft issues also have to suffer through long delays, waiting nearly a year on average to complete the process of sending affidavits and other documentation to substantiate their identities.

Telephone Overload: The Internal Revenue Service fielded about 73 million telephone calls during the 2022 filing season. While that number is overwhelming, consider that only one call out of 10 actually reached a human IRS employee. When compared with numbers from the 2021 filing season, the percentage of IRS-fielded calls in 2022 is very close to that in 2021.

If a private company failed to answer nine out of 10 customer calls, customers would
go elsewhere.

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Generally, the IRS will mail a notice or letter to a taxpayer first.

• Taxpayers can search IRS notices by visiting Understanding Your IRS Notice or Letter. However, not all IRS notices are searchable on the site.
• Be aware that fraudsters sometimes claim they already notified the taxpayer by mail or reference an IRS notice to make their scam seem legitimate.
• Taxpayers may check their secured online account or contact the IRS to confirm legitimacy of a notice.
• Debt relief firms often send unsolicited tax debt relief offers through the mail.

The IRS may send taxpayers a notice about filing past due tax returns. They should send their past due return to the address provided in the notice. Taxpayers can use the prior year forms, instructions and publications on IRS.gov to file past due returns or they can work with a tax professional.

After mailing a notice or letter, the IRS may call a taxpayer.

• IRS revenue agents or tax compliance officers may call a taxpayer or tax professional after mailing a notice to confirm an appointment or to discuss items for a scheduled audit. The IRS encourages taxpayers to review, How to Know it’s Really the IRS Calling or Knocking on Your Door: Collection.
• The IRS does not leave pre-recorded, urgent or threatening messages. In many phone scams, victims are told if they do not call back, a warrant will be issued for their arrest. 
• Private debt collectors, contracted by the IRS, can call taxpayers to collect certain outstanding inactive tax liabilities, but only after the taxpayer and their representative have received written notice.
• Private debt collection shouldn’t be confused with debt relief firms who will call, send lien notices or email taxpayers with debt relief offers.

The IRS doesn’t initiate contact with taxpayers by email to request personal or financial information.

• Taxpayers shouldn’t reply to a phishing email from someone who claims to be from the IRS, because the email address could be spoofed or fake. Emails from IRS employees will end in IRS.gov.

The IRS doesn’t send text messages or contact people through social media.

• Other than IRS Secure Access, the IRS does not use text messages to discuss personal tax issues, such as those involving bills or refunds. The IRS also will not send taxpayers messages via social media platforms.
• Scammers may text a taxpayer with a phony message about COVID-19 or “stimulus payments.” These messages often contain bogus links claiming to be IRS websites or other online tools.
• Fraudsters also will impersonate legitimate government agents and agencies on social media and try to initiate contact with taxpayers.

IRS revenue officers and agents may make in-person visits.

• IRS revenue officers and agents routinely make unannounced visits to a taxpayer’s home or place of business to discuss taxes owed, delinquent tax returns or a business falling behind on payroll tax deposits.
• IRS revenue officers will request payment of taxes owed by the taxpayer. However, taxpayers should remember that payment will never be requested to a source other than the U.S. Treasury.
• When visited by someone from the IRS, taxpayers should always ask for credentials. IRS representatives can always provide two forms of official credentials: a pocket commission and a Personal Identity Verification Credential.

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Licensed professionals such as CPAs, & attorneys, are not required to register with the IRS for the new electronic fingerprinting process.  

Unlicensed preparers must schedule an appointment with an IRS authorized vendor for fingerprinting. You can schedule your appointment by accessing the scheduling link located on the e-file application summary page.

The cutoff-date to mail your paper fingerprint cards (Form FD-258) to the IRS is August 15, 2022. Fingerprint cards postmarked after August 15, 2022, will not be processed and you will need to wait until September 25, 2022, to schedule your electronic fingerprinting appointment. Instructions for scheduling your appointment will be provided when you submit your e-file application. 

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