Category: IRS

Posted on by Jan Roberg

I Got My PTIN Number!

PTIN number

Despite the 5 identification numbers that the IRS already has for me, I still got lost in the system! Glad I'm found.

If you don’t prepare taxes for a living, you probably don’t know and don’t care what a PTIN is.  But if you’ve ever had to deal with a government agency, then you might understand my complaint.

A PTIN is a Professional Tax-preparer Identification Number.  I’ve already got one, but the IRS decided to change the rules and make me pay for it.  I don’t really like paying for something that I got for free and have already had for nine years, but I can live with it.   It’s supposed to make the tax preparation industry safer for consumers.  I’d feel better though if I thought it would actually do that. 

It’s now against the law to get paid for filing tax returns without having a PTIN.   It’s not a bad law really, any reputable tax preparer already has a PTIN anyway.    The IRS claims that it’s going to use the PTINs to monitor our tax preparation work.  If we’re crooked, we’ll get caught.  (They’ve been doing that for years already but if it makes them feel better to say so that’s fine with me.)   The fee I pay for getting my PTIN back is supposed to cover the cost of monitoring the system.  The problem is, it’s only monitoring those of us who get PTINs — the cheaters – the crooked tax preparers that are scamming the system don’t pay the fee and they’re not monitored.

If you’ve ever done any audit work, you know what I’m talking about.  A taxpayer comes to you because they received an IRS letter about a problem with their return.  They come to you because they can’t find the person that they paid to do the return in the first place.  “What do you mean?”  You ask, “Your return says self-prepared.”  But of course, that’s not the case.  They paid some fly-by-night tax preparer who doesn’t have enough confidence in his work to actually sign the return and will disappear right after April 15th if not sooner.  Those guys never get caught because the bad returns were all supposedly prepared by the taxpayers.  These are the people who need to be caught and prosecuted.  The new PTIN registration does nothing to address this problem

I’m late getting my PTIN because quite frankly, I was sort of  lost in the system for awhile.  That wasn’t very comforting, but I think the IRS could find me if they really wanted to.  I currently have  five IRS identification numbers in addition to my social security number.  I have to sign  returns using my PTIN, but I also have to put my company name and Employer Identification Number on each return.  That’s two numbers right there on every tax return I prepare.  In order to electronically file a return I have to have my Electronic Return Originator (ERO) number(3).  Most people have to be fingerprinted my a local law enforcement office to get that number.  The Sheriff didn’t have to fingerprint me to get my ERO number because I already had my Enrolled Agent number (4).  Enrolled agents already go through a bunch of other stuff including having the IRS review your prior year’s returns before they’re allowed to practice.  Because I do audit work, I also have a CAF (Centralized Authorization File) number(5) that I must use every time I represent on of those sorry folks who went to a fly-by-night preparer. 

So it seems like the IRS has plenty of information on those of us who are reputable tax preparers already, but there’s still no protection against the bad guys who fly under the radar with no type of registration whatsoever.  They cut into our businesses, make the profession look bad, and cause problems for honest taxpayers who really need help.  If the IRS would address that problem, I wouldn’t complain about the PTIN fee so much.

Posted on by Jan Roberg

How to get a Copy of your Tax Return

tax return transcriptMany people need a copy of their federal income tax return in order to get a mortgage or file for financial aid.  You can order a copy of your return from the IRS for $57, but most people can get everything they need with a tax return transcript.

I was just looking at another website that offered to get your transcript for you, for a fee of $99.  But you can get that transcript directly from the IRS for free and it’s easy to do.   Here’s how:

Call the IRS main phone number:  1 (800) 829-1040

You’re going to hear a computerized woman’s voice asking you questions.  You will select “2” for information on your personal taxes.

Next, you will select “1” for information about your tax history.

Next you’ll enter “2” to get a transcript.

[Just so you know, you can call the IRS at 1 800 829-1040, type in 2, then 1, then 2 and it will take you to this next part.  You don’t have to listen to the whole computerized menu offerings.]

After that, you’ll be asked for your social security number.  If you’re married, use the social security number of the spouse listed first on the return.  They’ll be questions to verify your address.  They’ll ask what year you need the transcript for, but it’s all computer automated and you respond with your telephone keypad.  You can order up to 10 transcripts if you need them.

See how easy that is?  It will take 5 to 10 days for your transcripts to arrive at your address.   And you won’t have wasted any money! 

If you must have a photo copy of your tax return, you’ll need to file form 4506.  It will cost you $57 and can take up to 60 days to receive.  Before you spend the money, be sure to check with the bank and see if a transcript won’t be acceptable.  Here’s a link to the form if you need it.   Form 4506

Posted on by Jan Roberg

How to Report Tax Fraud

photo by S.E.B.

As an enrolled agent, I have something called client privilege. Basically it means that I can’t tell the IRS what I’ve discussed with a client and I don’t have to share any written information that is not already on the tax return. While it’s illegal for me to file a false tax return, I’m not allowed to tattle either.

But people seem to want me to. I often get calls from people telling me they know someone is cheating on their taxes and they want me to report them. First and foremost, I am not the IRS. If you truly believe that someone is cheating on their taxes and you really want to report it, you have to report it directly to the IRS.

I think the main reason that people call me is they’ve called the IRS first and “nothing happened.” That’s quite possible, and here’s why.  For one thing, if you really are reporting tax fraud, you need to fill out form 3949 and mail it to: Internal Revenue Service, Fresno, CA 93888.

Here’s a link to get the form on the IRS website.
http://www.irs.gov/pub/irs-pdf/f3949a.pdf

A phone call won’t do the trick. The IRS wants its paperwork. It has to be the right paperwork and it has to go to the right place.

Second, when completing the form, only answer the questions asked–see the second page of the form for a more detailed explanation of what they’re looking for. Don’t send the IRS anything not specifically asked for. If the IRS is going to build a successful case, they will have to do the work themselves. They have access to an amazing amount of information plus they have the power of subpoena. If they want your evidence, they will ask you for it (but don’t hold your breath.)

Unless you are a crucial witness to the case, you will hear nothing about the audit from the IRS. They won’t even tell you if they perform one. You cannot call them to learn about the audit because the IRS will not be able to tell you anything, it would be a violation of privacy laws. Once you’ve mailed in that form– you’re done.  There will never be a phone call thanking you for your assistance.  You won’t see the police come and cart the person away.  If you’re seeking revenge, you’ll never know if you got it or not.

Here’s another tip: look closely at your motives for reporting the fraud. Are you genuinely trying to report a real tax crime or are you mad at your ex-husband for not paying the child support while buying his new girlfriend a diamond ring? The IRS really does not want to be involved in personal domestic squabbles.

If you are reporting a former spouse, look long and hard at what you’re doing. It’s quite possible that an audit could come back at you. Let’s say you’ve only been divorced for a few months and the IRS performs an audit. If they find that your ex-husband was under-reporting income, they are likely to investigate prior years. If they find that he owes taxes for years that you were married to him, you could be held liable for paying those taxes. Stop and think before you act.

One final thing, if your complaint is that someone claimed your children on his or her return and shouldn’t have, don’t file a 3949 form. Just prepare your return correctly, listing your children as dependents, and mail it in. The IRS will take it from there.

Posted on by Jan Roberg

IRS Plans to Remove Debt Indicator for 2011

IRS Plans to Remove Debt Indicator for 2011

Have you ever gotten one of those Refund Anticipation Loans (also known as RALs) with your tax return? Those are the “fast money” refunds where you pay a fee and get your refund immediately, or perhaps in one or two days instead of waiting for two weeks. What the IRS has just announced could pretty much put and end to those types of loans.

In the past, the IRS has provided tax preparer firms and financial institutions with a “debt indicator” tool. Basically, when a tax return was prepared, if a person applied for the RAL, there would be a response about any government debt owed by the individual. Basically, if debt was owed, the RAL would be denied because the loan is secured by the anticipated refund.

According to the IRS, they no longer see a need for these Rapid Refund Loans since a person can receive his or her refund in 10 days.  There’s been a great deal of public pressure against RALs.  Consumer groups such as the National Consumer Law Center and the Consumer Federation of America have opposed RALs for years.  One reason is that RALS are usually targeted at low income households and the fees are often very high in relation to the loan provided.   The profit motive in RALS can sometimes lead to predatory and even fraudulent activity.  In 2008, the latest year that I could get figures for, 8.4 million RAL loans were made.  $738 million was spent on loan fees.  $68 million was spent on other related fees.

Individuals will still have access to their own personal information concerning debt via the “Where’s My Refund?” application on the IRS website.

For a look at the IRS press release dated August 5, 2010, click here:  http://www.irs.gov/newsroom/article/0,,id=226310,00.html

Posted on by Jan Roberg

IRS Emails – It’s a Scam!

the IRS won't email you

Updated June 2018.

 

I originally posted this warning over 8 years ago – and the problem is:  it’s still going on!

 

I’ve been asked to help get the word out about IRS scams.  Right now appears to be a popular time for scammers to send phishing emails masquerading as the IRS.  One of the most popular scams involves telling you that there’s a problem with your refund and asking you for bank account information.  The emails look pretty convincing with the IRS logo and official sounding language.  Don’t be fooled!  The IRS will never ask you for your social security number or bank information in an email.  Never.

 

If you receive one of these emails, please forward it to phishing@irs.gov.  That way, the IRS security staff can examine it and take action.  Be sure to delete the email and whatever you do, do not click on any links or open any attachments.  Does it really help to forward the email?  I don’t know.   But the IRS won’t know about a scam if no one tells them so I recommend forwarding it.

 

In addition to the refund scam, another popular scam involves winning a lottery or contest where the email claims that the Department of the Treasury needs you to write a check for your tax withholding.   Not true.  “Withholding” means that the contest agency will hold back some of the money that you would have received for your prize to pay the government.  You should not have to write a check to receive your prize.  Ever.

 

And the phone call that says the IRS will file a lawsuit against you?  Yep, that’s another scam.  Here’s my video about that:  IRS scam video

 

If you’d like to read more about IRS scams, check out this link.  It tells about scams, how they work, and how to recognize them.  IRS Scams

 

Most importantly, talk to people!  You’re reading this on the internet, you’ve probably heard all about these scams.  But maybe you know someone who isn’t as savvy as you are.  The whole reason scams are effective is that they catch people who are vulnerable.  Senior citizens and immigrants are often targets, but they’re not the only ones.  There are scams targeting college students, scams targeting veterans, scams targeting small business owners, etc.   You name a group, there’s probably a scam targeting them.  So please, be on guard for these scammers, and please let your friends and neighbors know about them too.  Thank you.