Tax

As a reminder, individuals with “seriously delinquent tax debts” are subject to a new set of provisions courtesy of the Fixing America’s Surface Transportation (FAST) Act, signed into law in December 2015. These provisions went into effect in February 2018.

The FAST Act requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt and also requires the State Department to deny their passport application or deny renewal of their passport. In certain instances, the State Department may revoke their passport.

Taxpayers affected by this law are those with a seriously delinquent tax debt, generally, an individual who owes the IRS more than $51,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired, or the IRS has issued a levy.

Taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt by doing the following:

• Paying the tax debt in full
• Paying the tax debt timely under an approved installment agreement,
• Paying the tax debt timely under an accepted offer in compromise,
• Paying the tax debt timely under the terms of a settlement agreement with the
• Department of Justice,
• Having requested or have a pending collection due process appeal with a levy, or
• Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

However, a taxpayer’s passport won’t be at risk under this program if an individual:

• Is in bankruptcy
• Is identified by the IRS as a victim of tax-related identity theft
• Has an account that the IRS has determined is currently not collectible due to hardship
• Is located within a federally declared disaster area
• Has a request pending with the IRS for an installment agreement
• Has a pending offer in compromise with the IRS
• Has an IRS accepted adjustment that will satisfy the debt in full

For taxpayers serving in a combat zone, and who also owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.

Taxpayers who are behind on their tax obligations should come forward and pay what they owe or enter into a payment plan with the IRS and may qualify for one of several relief programs, including the following:

• Taxpayers can request a payment agreement with the IRS by filing Form 9465, Installment Agreement Request. Taxpayers can download this form from IRS.gov and mail it along with a tax return, bill or notice. Some taxpayers may be eligible to use the online payment agreement to set up a monthly payment agreement for up to 72 months.
• Financially distressed taxpayers may qualify for an offer in compromise, an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to determine the taxpayer’s ability to pay.

If you owe back taxes and are worried your passport could be revoked because of unpaid taxes, please contact the office.

• By Leon Clinton
• May 20, 2019

The tax credit available for purchasers of new General Motors plug-in electric vehicles begins phasing out on April 1, 2019. The phaseout was triggered because General Motors, LLC has sold more than 200,000 vehicles eligible for the plug-in electric drive motor vehicle credit during the fourth quarter of 2018.

Qualifying vehicles by the manufacturer, which include Chevrolet Spark EV (2014-2016), Chevrolet Volt (2011-2019), Chevrolet Bolt (2017-2019), Cadillac CT6 Plug-In (2017-2018), and Cadillac ELR (2014, 2016) are eligible for a $7,500 credit if acquired before April 1, 2019. Beginning April 1, 2019, however, the credit is reduced to $3,750 for General Motors’ eligible vehicles. For the next two quarters beginning on October 1, 2019, the credit will be reduced even further to $1,875. After March 31, 2020, no credit will be available.

The plug-in electric drive motor vehicle credit was enacted in the Energy Improvement and Extension Act of 2008 and subsequently modified. The law enables owners of eligible passenger vehicles and light trucks to take the credit. By law, five quarters after reaching the sales threshold, the credit ends for the manufacturer. General Motors vehicles are eligible for some portion of the credit until April 1, 2020.

Please call if you’d like more information about the Plug-In Electric Drive Motor Vehicle Credit.

• By Leon Clinton
• May 15, 2019

Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund. It presents challenges to individuals, businesses, organizations and government agencies, including the IRS.

Learning that you are a victim of identity theft can be a stressful event. In many cases, you may not be aware that someone has stolen your identity and the IRS may be the first to let you know you’re a victim of ID theft after you try to file your taxes.

Between 2015 and 2018, the number of taxpayers reporting they were identity theft victims fell 71 percent. However, despite the steep drop in tax-related identity theft in recent years, taxpayers should remember that identity thieves constantly strive to find new schemes that work. Once their ruse begins to fail as taxpayers become aware of their ploys, they change tactics. Taxpayers and tax professionals must remain vigilant to the various scams and schemes used for data thefts.

Here’s what you should know about identity theft:

1. Protect your Records. Do not carry your Social Security card or other documents with your SSN (Social Security Number) on them. Only provide your SSN if it’s necessary and you know the person requesting it. Treat your personal information, including tax returns, as if they were cash. Don’t leave it in plain sight for people to steal. Protect your computers with anti-spam and anti-virus software and routinely change passwords for all of your Internet accounts.

2. Don’t Fall for Scams. Criminals often try to impersonate your bank, credit card company, and even the IRS in order to steal your personal data. Learn to recognize and avoid those fake emails and texts. Always err on the side of caution and delete anything that seems suspicious or unfamiliar.

3. Beware of Threatening Phone Calls. Correspondence from the IRS is always in the form of a letter in the mail. The IRS will not call you threatening a lawsuit, arrest, or to demand an immediate tax payment using a prepaid debit card, gift card, or wire transfer. If you receive a threatening phone call, hang up immediately.

4. Report ID Theft to Law Enforcement. If you discover that a tax return was already filed using your SSN and cannot e-file your return because, consider taking the following steps:

• File your taxes by paper and pay any taxes owed.
• File an IRS Form 14039, Identity Theft Affidavit (see below). Print the form and mail or fax it according to the instructions.
• Contact one of the three credit bureaus (Equifax, Transunion, and Experian) to place a fraud alert and/or a credit freeze on your account.

5. Complete an IRS Form 14039, Identity Theft Affidavit. Once you’ve filed a police report, file an IRS Form 14039, Identity Theft Affidavit. Print the form and mail or fax it according to the instructions. You may include it with your paper tax return as well.

6. IRS Notices and Letters. If the IRS identifies a suspicious tax return with your SSN, it may send you a letter asking you to verify your identity by calling a special number or visiting a Taxpayer Assistance Center. This is to protect you from tax-related identity theft.

7. IP PINs. If a taxpayer reports that they are a victim of ID theft or the IRS identifies a taxpayer as being a victim, he or she will be issued an IP PIN (Identity Protection Personal Identification Number). The IP PIN is a unique six-digit number that a victim of ID theft uses to file a tax return. Each year, you will receive an IRS letter with a new IP PIN.

8. Data Breaches. Not every identity theft case involves taxes. If you learn about a data breach that may have compromised your personal information, keep in mind that not every data breach results in identity theft. Make sure you know what kind of information has been stolen so you can take the appropriate steps before contacting the IRS.

9. Report Suspicious Activity. If you suspect or know of an individual or business that is committing tax fraud, you can report it on the IRS.gov website.

10. IRS Assistance. Information about tax-related identity theft is available online at IRS.gov. The IRS has a special section on IRS.gov devoted to identity theft and a phone number available for victims to obtain assistance.

If you have any questions about identity theft and your taxes, don’t hesitate to call.

• By Leon Clinton
• May 10, 2019