Now that we are a month beyond the regular tax filing deadline, most people don’t want to think about taxes anymore. If you happen to receive a letter form the IRS, though, then it becomes impossible to not do so. And of course when this letter comes, it immediately feels huge and we envision it as a giant problem because there is no way the agency is contacting us with good news. Last week, the IRS released information informing taxpayers what to do if they do receive such a letter and I thought it was worth spending some time discussing that information because of how difficult it can be to think through things in the moment it is received.
So first, actually take the time to understand what the letter is saying. Any notice you receive will deal with a specific issue from a specific tax year. The IRS feels like such an amorphous, almost omnipotent entity that it can often feel like anything coming from it has the same difficult-to-pinpoint status. But instead, it will let you know exactly what it concerns and chances are then at least closer to 50/50 that you will be aware of what it is referring to. You may disagree with their take on it, but it may not be the surprise it feels like when it suddenly shows up in your mailbox. And then, if you are aware of the issue and already know it needs to be addressed, the letter should also include instructions on what your next steps need to be. As long as you follow what you need to do with the agency, any visions of guys in black coats and sunglasses surrounding your home can be pushed away. Of course, there are also cases when the information you receive may be new to you or you may disagree with the action the agency is taking. Sometimes this comes in the form of a changed or corrected tax return. If this happens, again, read the letter, see what it says, and it is possible that you forgot to include a number from a tax form on your return, and the IRS is just correcting for that. If you completely disagree with what some notices says, though, at that point you are likely best served by consulting your tax professional. They can help you see exactly why you are receiving the letter, determine if it is worth battling and help you take forward steps from there. Finally, when it comes to legitimacy, it is worth a reminder to say that the IRS will never contact you through social media or a text message. The first contact from the agency almost always comes through the mail. If you first hear about a tax issue that you did not know about through any means other than the mail, it is very likely a scam, deserves no notice, and no action should be taken on your part. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter
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Over the past few years, it has become ever clearer how much the IRS needed to work toward modernizing as it seemed to be falling behind and ever more outpaced by technology, making its service feel worse and worse. Thankfully, it does seem to now be making some forward steps. This doesn’t mean that things are perfect, but it does mean that things are at least being addressed.
As part of its plans to move forward, the IRS has released its latest Strategic Operating Plan that includes the following five key objectives:
Granted, none of these comes across as anything earth-shattering and instead are things most probably assume it is just doing all the time. I do want to spend some time on Objective 3, however, since the agency has indicated further commitment to addressing that issue. Looking toward tax year 2026, the IRS is planning on getting audit rates on large corporations with assets over $250 million to 22.6%, up from 8.8% in 2019. In addition, audit rates on large, complex partnerships are looking to get to 1% from .1% in 2019. And finally, audit rates on wealthy individuals with income of over $10 million has a target audit rate of 16.5% from 11% in 2019. Of course, those that fit into these categories are a minority of all taxpayers. They are significant jumps, though, so those who do fall into those groups may want to give a little extra attention to making sure everything is in order when it comes to tax filing in the coming years. Also worth noting, though, is the fact that the IRS has also emphasized that audit rates will not increase for small businesses and individuals earning under $400,000. So almost everyone is safe from any increased scrutiny … and we can get better service … and those who do owe more money are going to be tracked down more to pay it … Boy, if all this actually happens, maybe it won’t be so bad. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter Happy National Small Business Week!
Okay, you probably didn’t even know this was happening. I suppose it is not the most celebrated of fake holidays (It’s tough for anyone to hold a candle to February 22 – National Margarita Day) but it is a real thing and something that we wanted to give a little time to in our world. After all, small business is even part of our name, it is what we do. And since it is what we do, it does only feel right that a week is chosen to spotlight these businesses, giving a little extra time and attention to hopefully get them a little extra success. For you see, part of why we love what we do is the help that we can give others. If our clients succeed, then we succeed. And one of the toughest parts of starting a small business is that many of them are not started by businesspeople. Instead, what usually happens is that someone has a passion that they wish they could turn into a career and find an angle to start a business to do that. But how do you even set up a business? How do you get paid once you have set up a business? How do you keep track of your finances once you are getting paid? Does filing your taxes change when you are a business? The fact that these questions exist makes a lot of sense. How can you be expected to know something when you have zero experience with it before then? Possibly unfortunately, many new small business owners try to tackle these issues themselves. It is not as if one can’t find these answers and implement them perfectly, but it takes time and that is something one may not be able to afford while trying to do all the other things involved with running a business. And many of those other things you must do, well, those are the ones you felt passionate about in the first place and actually wanted to do. Now of course, to seek help from others to take care of these tasks does get a business owner back that time, but it costs money, which is something that can often feel in short supply when just starting up. This can be a tough push-and-pull situation without easy answers. But for anyone out there reading this, if you do reach a point where it will be worth partnering with someone who is willing to commit to your excellence alongside you, we are always happy to help. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter I know, I know, tax season is over, it should be time to move on. But please, allow me one more week.
This is because even though we are a week removed from the regular tax-season deadline (don’t get me started on extensions yet), that doesn’t mean that everyone’s questions have been answered. And most of those questions now revolve around getting their refund. So first, I must assure you that we have no secret means of getting a refund processed faster or of giving you a specific date on when you can expect it. As a rule, refunds are paid within three weeks of filing your return, but there are various reasons why this could be held up. And if the IRS determines that it needs more information before issuing a refund, note of that would come by mail, so yes, it can become easy for the days to start to pile up. The agency does have a tool, however, that can at least let you know where things stand for you on its Where’s My Refund webpage. Using this tool, you can track where your refund status stands and know where you are in the process. As a bit of warning, it is only updated once a day, so don’t make it all too frequent of a website visit. And just two further notes on refunds before we move on to the future: First, if you find you received a refund that was smaller than expected, don’t fret about it much, the IRS will send you a letter explaining the situation. They will not just arbitrarily change the number on you. Lastly, it is worth giving some thought as to what any refund means. This generally means you have paid more in taxes through the year than you owed. And sure, getting that refund money in one chunk feels great when it happens but you may want to think about adjusting your withholding or estimated payments to get a little bit more in your pocket throughout the year. Or if your situation is going to change this year, you may want to make adjustments so that you do not end up owing the government money come next tax year. For yes, this may be the time of year when most no longer want to think about taxes, but it’s also a moment when you still have the time to make slight moves that can take place over the rest of the year and add up enough to still make a difference come next year. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter Some things never seen to go ‘great,’ and that is how tax season always feels around here. This is not a bad thing but is more just the nature of the beast. Across the country, there are so many of us who earned some money who then feel the pressure of a government mandate … one that it is almost impossible not to worry about a possible bill at the end of it (and just how much it could be for). Because of all that, it is impossible for our work to always feel ‘great’ because everyone is in the midst of a stressful time and sometimes we have to be the bearers of bad news.
At the same time, though, that is part of what makes it the most fulfilling. We are happy to be the people who can help our clients through these stressful times and are honored that even if we sometimes must deliver bad news, we can do so in a way that leaves someone knowing we are still giving them the best possible outcome. This comes with a level of trust that we do not take for granted. So, I just wanted to take a moment this week to say thank you to everyone who worked with us this tax season. Even if an extension means it is not over yet), even if it doesn’t always feel ‘great,’ it is still a pleasure that we get to perform this service alongside you and hope to continue doing so well into the future. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter |
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