Tax Debts Archives - Chicago IRS Tax Attorney

IRS Goes Digital

August 11, 2023 by admin

IRS Moves Forward On Their Plan to Monitor All Taxpayer Activity

Recently, I wrote about the danger of the IRS gathering our tax data electronically and using Artificial Intelligence and Machine Learning to monitor taxpayer activity – your activity.

Today the IRS announced plans to go paper-free by 2026 using the funding in the Inflation Reduction Act. I pointed out that the IRS will use that money more for improving their information infrastructure, than auditing individuals and businesses. It wasn’t too long ago the IRS announced the “Free” tax return filing system. And now with the push to paperless filing – all that data will be ripe for data mining.

The IRS says this new initiative will improve customer service and efficiency. But do we really want an efficient IRS? The new IRS Commissioner, Danny Werfel, recently boasted about the IRS introducing the scanning of paper 1040s. He thought that was “history in the making.” Hey Werfel, it’s 2023! Scanning paper has been around for decades.

We have two things to hope for. First, the IRS continues its history of incompetence when it comes to modernizing IRS technology. After all, they have promised improvements since the 1960s, and we are still told how antiqued the IRS computer system is.

Second, Congress cuts more of that $80 billion giveaway in the Inflation Reduction Act. Congress did manage to cut $21 Billion from the IRS budget last May in the debt ceiling negotiations. Let’s hope for more. The IRS budget is still close to $20 Billion a year!

IRS launches paperless processing initiative

https://www.irs.gov/newsroom/irs-launches-paperless-processing-initiative

Remarks by IRS Commissioner Danny Werfel on the paperless processing initiative

https://www.irs.gov/newsroom/remarks-by-irs-commissioner-danny-werfel-on-the-paperless-processing-initiative

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

IRS “Truck” Coming

January 30, 2023 by admin

Monday January 30, 2023 – The IRS recently announced a delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K. Tax year 2022 will be a “Transition” year.

As one tax expert put it, “the new changes constituted one of the largest ‘cash grabs’ by the IRS in recent memory and were likely to hit taxpayers ‘like a truck.’

On March 11, 2021, President Joe Biden signed into law the American Rescue Plan Act of 2021. Let’s take a look at how this new law could potentially impact taxpayers.

One area the reporting requirements will hit hard is fantasy sports players. They must report any payments they make over $600 to both the IRS and those receiving payment.

Previously, TPSOs had to report payments only if they were over $20,000 or more in value. A TPSO is defined as any business entity or person who processes credit card payments and/or engages in other activities related to money transfers and various other financial transactions.

Therefore, anyone engaging in fantasy sports leagues where cash payouts are made and processed via a third-party would be subject to these reporting requirements. These players will face increased chances of an audit or taxation. While the IRS has promised not to go after average taxpayers, this new law could target them, nonetheless.

Changes brought about by the American Rescue Plan Act of 2021 have direct implications on ALL taxpayers. The lower reporting threshold means increased 1099s being filed with the IRS and higher chances of audit or taxation.

Attorney Steven A. Leahy will evaluate the impact of the American Rescue Plan Act of 2021’s tax plan on the average American taxpayer on Today’s Tax Talk.

https://www.foxnews.com/media/irs-cash-grab-fantasy-sports-hit-americans-like-truck-tax-experts

IRS Needs To Be “Completely Redone”

January 24, 2023 by admin

Monday January 23, 2023 – U.S. Treasury Secretary Janet Yellen told Reuters “I’m excited about legislation that’s passed and I want to make sure that it makes the difference it should make, and that includes the IRS,” she said. “That agency needs to be completely redone, and it’s a big task.”

She also shot down the idea of minting a $1 Trillion Dollar coin to avoid negotiating the debt limit with Congress as a “gimmick.”

Yellen is looking to find ways to spend the $80 Billion Dollar boondoggle, and Congress is trying to find ways to eliminate it. Let’s hope Congress finally does something right.

Attorney Steven A. Leahy looks at both sides on Today’s Tax Talk.

https://www.dailymail.co.uk/news/article-11666579/Treasury-Sec-Yellen-says-IRS-needs-completely-redone-rules-1T-coin-debt-limit.html

https://www.yahoo.com/news/janet-yellen-says-not-given-165317435.html

https://nypost.com/2023/01/23/u-s-treasury-secretary-janet-yellen-says-irs-needs-to-be-completely-redone/

https://www.reuters.com/world/us/us-treasurys-yellen-says-irs-needs-be-completely-redone-2023-01-22/

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

Solving Your IRS Problem – And Keeping it Solved!

August 18, 2016 by admin

Steven A. Leahy

Solving Your IRS Problem – And Keeping it Solved!

By Steven A Leahy

Listeners to the IRS Radio Hour – heard every Sunday afternoon at 5:00 on AM 560 The Answer – know I help people and businesses solve their IRS problems. What I have learned is – solving the IRS problem is only step one. The next step is keeping the problem solved.

When you reach an agreement with the IRS – whether the remedy is an offer-in-compromise, installment agreement or being declared currently not collectible – there are other conditions of the agreement, conditions often overlooked by taxpayers. For example, here are the conditions included in a recent installment agreement we worked out for a client with the IRS. The IRS wrote:

The other conditions of this agreement are:

– You file and pay on time all federal and state taxes due during the term of the agreement.

– We’ll apply all installment agreement payments to the oldest tax assessments first, then penalties, then interest on that assessment.

– You pay all installment agreement user fees.

– You provide a current financial statement when we request one. If you have a change in your ability to pay, we can revise or cancel your installment agreement.

In addition, the IRS will “apply any refunds you’re due to the amount you owe until you pay your balance in full. A refund payment isn’t a substitute for a monthly payment.”

The first condition is the most common stumbling block. Taxpayers often fail to file and pay all federal and state taxes on time. On time, to the IRS, means NO EXTENSIONS. If you fail to meet any of these conditions, the IRS will cancel the agreement and the taxpayer will find themselves right back where they started.

That’s why, once we solve a client’s IRS problem we offer to continue monitoring the case under our IRS Protection Plan. Under the IRS Protection Plan, we continue covering our client with our Power of Attorney, so we continue to receive all IRS notices. We offer on-going advice about tax issues and we complete their annual tax returns. Occasionally the IRS will erroneously cancel an agreement, or cancel an agreement but agree to re-instate the agreement after a request is submitted. Our IRS protection plan covers those items too. In addition, if you do default, we will offer a discounted rate to work with the IRS on a new agreement.

Even if you don’t default, some agreements, such as partial installment agreements or currently not collectible status may be reviewed after some time, typically every 2 years. And the IRS Protection Plan will provide a discounted rate for that service also.

So, even after you fix your IRS problem, you have to remain vigilant. That’s where Opem Tax Resolutions and The Law Office of Steven A. Leahy, PC comes in with the IRS Protection Plan. Give me a call at 312-664-6640 to fix your IRS problem and KEEP the problem fixed!

IRS Goes Digital

IRS launches paperless processing initiative

Remarks by IRS Commissioner Danny Werfel on the paperless processing initiative

IRS “Truck” Coming

IRS Needs To Be “Completely Redone”

What is a 1099-K Used For?

Solving Your IRS Problem – And Keeping it Solved!

Solving Your IRS Problem – And Keeping it Solved!

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