Most Serious IRS Problem – Processing Delays

January 13, 2023 by admin

Thursday January 12, 2023 – The Taxpayer Advocate Service (TAS) is an independent organization within the Internal Revenue Service (IRS) that helps taxpayers resolve problems with the agency. Each year, by law, the TAS releases a report to Congress highlighting the most serious problems encountered by taxpayers. The report, known as the National Taxpayer Advocate’s (NTA) report, identifies systemic issues that impede taxpayers’ ability to exercise their rights and recommends solutions to those problems.

The 2022 National Taxpayer Advocate report identified ranked the ten most serious problems encountered by taxpayers:

Processing Delays
Complexity of the Tax Code
IRS Hiring & Training
Telephone & In-Person Service
Online Access for Taxpayers and Tax Professionals.
E-File & Free File
IRS Transparency
Return Preparer Oversight
Appeals
Overseas Taxpayers

The biggest issue identified in the report is Processing Delays. That finding isn’t news to any taxpayer. The processing delay has been reported since last year.

The recently replaced IRS Commissioner, Charles Rettig told a Congressional hearing last March the backlog would be cleared by the end of 2022.

In the just released report the National Taxpayer Advocate, Erin Collins, wrote to Congress, saying ““We have begun to see the light at the end of the tunnel, I am just not sure how much further we have to travel before we see sunlight.”

So, the IRS did not clear the backlog by the end of 2022, despite the additional funding to do so. The additional funding BEFORE the additional $80 billon.

Attorney Steven A. Leahy looks at the Number one problem according to this report – Processing Delays – on Today’s Tax Talk.

https://www.taxpayeradvocate.irs.gov/reports/2022-annual-report-to-congress/most-serious-problems/

https://www.washingtonpost.com/business/2023/01/11/irs-backlog-delays-refunds/

https://www.thinkadvisor.com/2023/01/11/taxpayer-service-expected-to-improve-in-2023-irs-says/

https://www.journalofaccountancy.com/news/2022/mar/commissioner-congress-irs-will-clear-backlog-years-end.html

Steven A. Leahy is a tax attorney in Illinois. He was the host of the long-running popular Radio Show “The IRS Radio Hour” heard every Sunday evening on AM 560 The Answer. Attorney Leahy is also the author of the book “Deal With Your IRS Problems Today!” You can get a FREE copy of this important book at FreeIRSBook.com. Or Call 24/7 (312)664-6649

New Congress First Target – IRS

January 12, 2023 by admin

Wednesday January 11, 2023 – With the new House Majority, Republicans are pledging to use their power to identify agencies at which to slash budgets. Their vote on Monday was the first step in this process, passing a repeal of $71 billion in IRS funding.

The Inflation Reduction Act was passed by Democrats in the last Congress – without a single Republican vote. It was designed to provide funding over 10 years to boost enforcement at the IRS after massive hiring surges.

It’s important that business owners stay informed about any changes related to taxes and filing procedures so they can comply with all requirements quickly and accurately. Keeping up-to-date on any news related to taxes is critical – especially as tax season approaches – so businesses can remain compliant while also taking advantage of any benefits they may be entitled to receive under current laws. Additionally, making sure you have accurate records and staying organized throughout the year can help reduce any potential issues down the line if you do get audited or need help with a specific issue related to your taxes or filing status.

Attorney Steven A. Leahy explores the details of this act and how it will affect you.

https://news.yahoo.com/heres-why-the-house-gop-made-defunding-the-irs-its-first-priority-123223299.html

https://www.govexec.com/workforce/2023/01/house-republicans-say-clawing-back-irs-funding-just-beginning-agency-spending-reductions/381647/

Unlocking the Potential of Account Abstraction

January 11, 2023 by admin

Crypto-Tuesday January 10, 2023 – Account abstraction (AA) is a powerful concept that can help business owners unlock the full potential of Ethereum transactions. AA combines user accounts and smart contracts into just one account type, giving users more flexibility in validating a transaction on the blockchain.

Account abstraction (AA) is a proposal that attempts to combine user accounts and smart contracts into just one Ethereum account type by making user accounts function like smart contracts. This means that transactions on the Ethereum blockchain will have more flexibility when it comes to being validated. For instance, instead of having rigid requirements such as a valid ECDSA signature or sufficient balance to cover the cost of computation, users will be able to design their own unique criteria for validating their transactions.

One of the biggest benefits of using account abstraction (AA) is that it enables multi-owner accounts, which can be used to facilitate auto payments between multiple parties without any manual intervention. This makes AA perfect for businesses looking to streamline their payment processes. Additionally, since AA allows you to customize your own criteria for validating a transaction, you can ensure that only legitimate transactions are processed on your blockchain network. This helps minimize fraud and other malicious activity on your blockchain network.

Another benefit of using account abstraction is that it allows for much faster transaction processing times than traditional Ethereum transactions. Since users are not required to wait for confirmations from miners before processing a transaction, you can dramatically reduce transaction processing times with AA and make sure your customers get their products or services delivered promptly.

Account abstraction (AA) offers numerous benefits for business owners looking to transition onto the blockchain platform and take advantage of its features in order to streamline their operations and reduce costs associated with managing payments between multiple parties. With AA, businesses can enjoy enhanced security measures due to customizable criteria for validating transactions as well as faster processing speeds due to reduced waiting times for confirmations from miners. Ultimately, if you want your business operations to run smoothly and efficiently while enjoying maximum security and trustworthiness from customers, then account abstraction may be exactly what you need!

Attorney Steven A. Leahy takes an in-depth look at what Account Abstraction is and how it can benefit your business.on Today’s Tax Talk.

https://www.forbes.com/sites/michaeldelcastillo/2022/12/19/visa-proposal-would-bring-ethereum-users-one-step-closer-to-being-their-own-bank/?sh=7b43948521b5

https://usa.visa.com/solutions/crypto/auto-payments-for-self-custodial-wallets.html

GOP Wants to Shrink IRS by $70 Billion

January 10, 2023 by admin

Monday January 9, 2023 – The recently seated Republican majority recently proposed a bill that would cut the IRS budget by $70 billion.

This proposal has been met with mixed reactions from both sides of the political aisle, as it would drastically reduce the proposed growth of IRS services and enforcement capabilities.

Attorney Steven A. Leahy explores what this bill means for taxpayers and how it might affect IRS operations in the future.

https://theprint.in/world/our-very-first-bill-will-repeal-funding-for-87000-new-irs-agents-speaker-us-house-of-representatives-kevin-mccarthy/1304254/

https://www.foxnews.com/politics/irs-chopping-block-first-day-legislative-work-speaker-mccarthy

What is a 1099-K Used For?

December 29, 2022 by admin

Thursday December 29, 2022 – There is much confusion about the 1099-K, no thanks to the IRS changing the reporting threshold rules – after the reporting threshold rules were changed by the American Rescue Plan in 2021. You may ask “what is 1099-K form used for?”

In short, 1099-Ks are sent to merchants, financial institutions, and other businesses that accept payments from customers through credit cards, debit cards, PayPal or other online payment systems to report gross transactions to the Internal Revenue Service (IRS).

Information Returns

1099-K is a version of what the IRS calls an information return. The IRS uses information returns to help ensure that individuals and businesses report all their income and pay the appropriate amount of taxes on that income. By requiring organizations to report certain types of payments made to individuals or businesses, the IRS can more easily track and verify the income that is being reported on tax returns. Reporting helps to improve voluntary tax compliance

Reporting Thresholds

Since 2011 the reporting threshold was:
• Gross payments that exceed $20,000, AND
• More than 200 such transactions

The American Rescue Plan of 2021 changed the reporting threshold for third-party settlement organizations, including payment apps and online third-party settlement organizations. The new threshold required these organizations to report transactions in excess of $600 per year, without regard to the number of transactions.

On December 23, 2022, the IRS announced that calendar year 2022 will be treated as a transition year for the reduced reporting threshold of $600. For calendar year 2022, third-party settlement organizations who issue Forms 1099-K are only required to report transactions where gross payments exceed $20,000 and there are more than 200 transactions. Back to the original threshold.

Conclusion:

I hope this helps clear up some of the confusion. Remember, the Sixteenth Amendment to the Constitution makes all income, “from whatever source derived” taxable. So, even if you do not receive a 1099 – all income must be reported on your tax return.

Attorney Steven A. Leahy reveals What a 1099-K is used for on Today’s Tax Talk.

https://www.irs.gov/businesses/understanding-your-form-1099-k

https://www.irs.gov/businesses/small-businesses-self-employed/a-guide-to-information-returns

https://www.marca.com/en/lifestyle/us-news/personal-finance/2022/12/29/63adb4cd22601d9b2c8b45f5.html

Most Serious IRS Problem – Processing Delays

New Congress First Target – IRS

Unlocking the Potential of Account Abstraction

GOP Wants to Shrink IRS by $70 Billion

What is a 1099-K Used For?

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