It is one thing to say that no one ever wants to really have personal dealings with the IRS. Most of us send in our tax returns every year with the hope to never hear about them again. After all, if you do hear from the IRS after that point, it is not because they were so impressed with your organizational skills that they want to refund some more money.
If you do hear from the IRS, however, and are sure that your taxes were correctly handled, at least you won’t have to worry THAT much and can have confidence that things will be decided in your favor. There is still the aggravation of jumping through the hoops until it has been handled, though. Not only that, but with recent and seemingly ever-increasing funding cuts for the IRS, it is more difficult than ever to actually talk to an actual person at the IRS to get the situation handled.
One would then think that going to irs.gov would make sense as a way to personally find your way through their maze. After all, getting information from the same organization would actually cut down on the work they have to do if it is up to date and accurate, right? The IRS must love if someone does this to get information and makes its job easier, no?
I clearly have had many dealings with the IRS, and I can say that it is an EXTREMELY rare case when it happens smoothly. It is difficult to actually talk to someone, and even then it is no guarantee that the person you talk to will have the knowledge necessary to help move the process along. Even with that experience, though, I had to shake my head through this recent article by Forbes.com’s Robert W. Wood.
In that article, Wood states that there was a recent memo sent to the IRS Field Examination Area Directors telling them the FAQs and other items posted on IRS.gov are not legal authority unless they also appear in the Internal Revenue Bulletin. Now I can’t disagree with the idea that the IRS should have a collection of official rules and regulations, but why would it publicly print something, under its own name, that does not hold the weight of authority?
If you have any answer to this that makes sense, I would love to hear it for crafting one is completely evading me.
And even if you can come up with a real reason, this is unfair. It is not a policy that I am saying is being misused, but it is clearly one that could be misused. Any authority that says it has the real rules and its public statements do not necessarily follow them comes off as potentially tyrannical. Thankfully we have enough checks in this country that the IRS is not doing that, but just what can a taxpayer do to navigate their waters then?
First, and thankfully most of you reading this are already doing this, use a tax professional to handle your taxes. If you want to be sure that you are not going to have serious IRS problems, have someone serious on your side before submitting any information to the IRS. Second, continue using that professional help during any communication with the IRS. You may not know all the answers needed when it comes to handling IRS issues, but some people do.
I can’t claim that this is really fair, but I still pride myself on being more fair and open with my clients than apparently some other organizations.
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It almost seems like a monthly rite of passage when the latest tax scam comes up that I have to cover in this spot. I almost can’t believe it sometimes, but as long as the IRS keeps putting out warnings, I feel it is my job to pass them along. At least with this latest one, it gives me the opportunity to highlight many of the things to look out for all at once.
First, the new scam starts with receiving a phone call claiming that you must make a payment through a prepaid debit card that is apparently linked to the Electronic Federal Tax Payment System (EFTPS). The system exists, and talking of it seems to lend credence to the scammer’s claim. The reality, though, is that it does not utilize this one magic mode of payment.
Second, there is a claim made that payment must be made immediately to avoid arrest. Although the process of working through a tax issue may never be fun, it is never that quick, and rarely that dire.
Also, the scam caller claims that there were previous attempts to contact the taxpayer via certified mail that were returned as undeliverable. Never pay heed to such words, for you should always assume that the first word you get from the IRS about any potential problem will come in writing.
Finally, the call comes with warnings to not contact a tax preparer, attorney, or local IRS office before making the payment. That’s because those are the people who could lead you to finding out that the whole thing is not legitimate.
Those are the four prongs of the latest attack, which has been reported across the country, but they all share some things in common.
Scam artists are out to play on fear. Each piece of this scam tries to build on the fear of reprisals while offering a way to make it end as quickly as possible.
If anyone, for any reason, ever asks for payment in a form of currency that can’t be traced, there is something illegitimate going on. Even if it is to purchase an opportunity that seems too be good to be true, remember it is because it is too good to be true. And why would the IRS not accept a check or a wire from your bank account? I mean, wouldn’t that direct payment from a bank account be faster than adding another middle-man transaction?
And if the federal government is able to track you down by phone, apparently has your legal information on a tax return, why couldn’t it get a letter into your hands first?
Finally, why would someone not want you to be in contact with the very people who are most knowledgeable about what is supposedly going on? If it was legitimate, wouldn’t they want to involve those who can help things reach an endpoint?
Listen to those questions that come up in your mind, and if you ever fear you may be becoming a potential victim of fraud, do contact someone, for we can help.
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When it comes to writing about the various parts of how to financially run your business in this space, the bit I talk about the least is probably payroll. This is most likely because it is an area that seems almost of the “set it and forget it” variety. Even if you pay hourly employees, once their payroll profile is correctly established, paying them is often a matter of plugging in the correct hours and letting a payroll service take care of the rest.
This might be illogical, though, for how little front-of-mind space payroll takes up is in opposition to how important it is to make sure that employees are paid. And one needs to realize how critical it is when people are not paid correctly.
In a recent article posted on cpapracticeadvisor.com, it was found that, “nearly half of American workers will seek new employment after just two payroll mistakes, such as being paid late or incorrectly.” This number seems high on first look, but why would people stick around if they are not being paid correctly? Even the employees who are most committed to a company’s vision and purpose are not ONLY working for that. On some level, everyone is working to be compensated, and for many that occupies the highest level.
After all, the same article says that only seven percent of employees will not report the error at all. So if people are not being paid correctly, that is a lot of angst and complaints that must be dealt with.
I also recently read an article on Forbes.com that caught my eye with the headline “Worst Taxes? Paying Someone Else’s.” Even as someone who spends a large amount of time thinking about and researching tax issues, I was not immediately sure what that could be referring to.
Well, it turns out that author Robert W. Wood looked at “responsible persons” who could be held liable if an employer did not pay all their payroll taxes. Now don’t freak out if you’re an employee who has no idea how your employee handles those responsibilities. First, reputable payroll providers withhold the money for those payments automatically so that they are paid with every payroll run. Second, “responsible persons” only includes officers, directors, and anyone who makes decisions about who to pay or can sign checks.
But yes, although this does not include most regular employees, it does allow for some people to be held responsible who may not have had any idea about the infractions. And then, although no one ever really wants to pay taxes, I do have to agree that paying those very much could be the worst kind.
What these two articles speak to overall is that payroll can be dangerous when handled wrong. And although it is not an area that tends to draw much attention, you do want to spend enough time on it to ensure that it is being handled correctly, and get the peace of mind that comes with that. So if you have any questions about how you are handling your payroll or the tax obligations that go with it, please let us help.
I know it is a mantra that comes up often, even from my own lips (or fingers in this case), but it is said/typed so often because it is true – if you earn money, chances are REALLY good that the IRS wants to know about it. Even with this being the case, tips sometimes seem to be in a gray area for many.
To follow the mantra, yes, if you’re receiving tips in your job, chances are REALLY good that the IRS wants to know about it. If you want a little more clarity and direction on this issue, though, the IRS actually has an Interactive Tax Assistant on the internet that will bring you through a series of questions to get a better answer on if your tips are taxable.
In this time when more people are using electronic forms of payment instead of cash, many tips are already being reported as part of a worker’s pay and being taxed accordingly. When it comes to cash, however, things get trickier.
It is not that the form of payment will cause tips to be taxed differently, but the fact that employers can let those go into that gray area. There are plenty of times when if you accept a tip, your employer may never know about it, and quite possibly doesn’t want to know about it. In that situation, well, I cannot necessarily encourage it, but it a client wants to keep it unreported and not want to worry about it, I have to shrug and move on.
I do, however, want to offers some, well, tips on how one can think about and track their tips if this is an area where you want better, and possibly more legal, record keeping.
First, it is not just cash and credit transactions that count as tips. If you receive items such as tickets or passes as tips, the value of those would also count as additional wages, and very likely unreported income. For any of these unreported tips, you will want to fill out a Form 1137 with your tax return.
In that type of full reporting, it could include tips received as part of a sharing partnership with co-workers. This is a situation that may make you want to be extra cognizant about keeping track of your tips. If you have co-workers that are fully reporting what they receive, and you are not, that is a discrepancy that could stand out. In fact, this is something that if done as it should will even include names on IRS Publication 1244. On that sheet, one tracks daily tips through different forms, including what is paid out to other employees.
I do not often like to give such links to different forms and such in this space, because I know it is not that exciting and gets into the minutiae of taxes and record keeping that make many cringe. As the concept of a sharing economy grows, however, it is likely that more and more people will be receiving tips as part of their income, and it could be one of those areas not given enough attention when it comes to figuring out your tax responsibility.
Let this be a reminder then that you probably don’t want to just ignore the issue.
Memorial Day is behind us, and our lives move forward.
Even a full day of memorializing cannot measure the worth and honor due to our fallen servicemen and women. For many of us, a 3-day weekend ushers in the summer ... and maybe that's because the task of memorializing itself seems not to be enough.
I'm reminded of Abraham Lincoln's words from the Gettysburg Address:
We can not consecrate--we can not hallow this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract.
A federal holiday seems to be a paltry tribute, but we can add our gratitude, and that matters a lot. Despite our current cultural chaos, we are blessed to live in this nation, and I'm grateful for the freedom I have, as a business owner and as a citizen, to conduct my life the way I see fit.
And I do have great hope for our next generation. It seems that every generation looks to the youth with trepidation for the future. But no doubt, so did the fathers and mothers of what we (now) call The Greatest Generation.
That said, though ... I offer this as a public service of sorts. Forward this along to that graduating young person in your life, and allow me to be the bearer of harsh reality.
Here's how to be great, whatever venture you find yourself taking...
"Real World" Personal Strategy Note
Millennials: How To Win In The Workplace
"Leaders aren't born, they are made. And they are made just like anything else, through hard work." -Vincent T. Lombardi
You're young and ambitious, a perfect representative of the millennial generation. Your energy may take you far, but fair or not, you've got to prove yourself to your boss and your colleagues. So, as someone who has been doing this for a little bit longer perhaps, here are some pointers on how to earn their respect...
I know you value being "real". So, on your resume and in person, resist the urge to embellish your accomplishments or brag about your talent. Let your achievements speak for themselves.
Handle the stress. Show that you can keep your cool when things don't go according to plan. If you wilt under pressure, managers and co-workers won't trust you with responsibility.
Cultivate the right relationships. Don't just kiss up to the boss (but don't ignore him or her either). Identify people who can help you, and whom you can help, and establish long-term relationships with the potential to benefit both of you.
Learn to communicate! Your email, reports, and notes should be grammatically correct and free of LOL, JK, and other acronyms, K? Read everything over carefully to be sure you're making the point you intend, in appropriate language. Concentrate on content that's clear and easy to follow.
Don't complain. Not everything is a perfect social justice moment. You may be disappointed or angered by a manager's decision. Don't take it to Twitter. Live with it. If you get a reputation for agitating, you'll have a much harder time convincing people that they should give you their attention and trust.
Show some humility. You may have gotten straight As in college, and you may have the greatest idea for a new product EVAH. But if you insist on telling people how smart you are, you'll alienate co-workers and managers who would otherwise be willing to help you. Show some maturity, and listen to the people around you with respect.
Perhaps this doesn't go down as smoothly as it should in order to be perfectly received. But acting on this advice might just set you up for the kind of long-term success you have always hoped for.